The value-relevance of SFAS no. 95 cash flows from operations as assessed by security market effects

Cheng-shing Cheng, Chao Shin Liu, Thomas F. Schaefer

Research output: Journal article publicationJournal articleAcademic researchpeer-review

33 Citations (Scopus)


This paper examines the value-relevance of cash flows from operations as reported under Statement of Financial Accounting Standards (SFAS) No. 95 Statement of Cash Flows. We focus on the value-relevance of cash flows from operations to investors in particular and to the investment community at large. We do this by examining contemporaneous associations between the SFAS No. 95 disclosures and stock price changes after controlling for earnings information. These market effects suggest that SFAS No. 95 cash flows from operations are relevant disclosures for investment decisions. The results also provide standard setters with important evidence supporting continued requirements for disclosure of cash flow information. We also compare the value-relevance of the SFAS No. 95 data with estimates readily available from balance sheet and income statement data. While our results show that estimated cash flows from operations have incremental value-relevance beyond earnings, the estimates fail to show significant market effects after the actual SFAS No. 95 disclosures are included in the analysis. In contrast, we find that the SFAS No. 95 data continue to have value-relevance in market association tests beyond estimated cash flows from operations.
Original languageEnglish
Pages (from-to)1-15
Number of pages15
JournalAccounting Horizons
Issue number3
Publication statusPublished - 1 Dec 1997
Externally publishedYes

ASJC Scopus subject areas

  • Accounting

Cite this