Cash flows, accruals, earnings and earnings permanence are they value relevant

We investigated the issue of whether cash flows components and accruals are value-relevant beyond earnings in Malaysia following the announcement of new accounting standard MASB 5 Cash Flows Statement (FRS107). Based on a sample of 337 observations from 1999-2000, results from pooled OLS regression provides support for superiority of earnings over cash flows information over three different stock return models. In addition, we ran first- differenced estimation and found that cash flows from financing and investing are more value-relevant than cash flows from operation.