In view of the new requirement for companies in Malaysia to prepare cash flow statements, it is especially forthcoming to build a body of evidence on the usefulness of cash flow information in the Malaysian context. This study examines the association of cash flow measures and market value of Malaysian listed companies. It will provide evidence of whether the various cash flow construct are fundamental in explaining differences in market values across companies. The nature of the study limits the scope within which usefulness is examined. Security market users form part of total users of accounting information. There are other users e.g. lenders, employees, etc. who would find accounting information, specifically cash measure useful in other ways that are not being examined in this research. As such it is naïve and premature to say findings would have major reporting policy implications. In a modest way, the findings would provide evidence in support or otherwise of the equity valuation model using data from Malaysia. This research seeks answers to the following questions (1) Is there significant association between market value and cash flow available after investment and dividend s but before external financing? , (2) Can total investment and dividends each explain differences in market values across firms? ; and (3) Is there difference in significance in performance of current and non-current accruals as predictor of future cash flows?

Research Team:
•  Radziah Adul Latif

Institute:
UKM