Ohlson(1995) and Feltham and Ohlson (1995) explain the importance of the financial reports through clean surplus relation and build up the relationship of market value, book value and earnings. The main structure of Ohlson model is the balance sheet and the income statement; however, the model doesn¡¦t contain the information of cash flows. The purpose of this paper is to find the relationship of accruals, cash flows, and market value. The results of this paper show that to divide net income into accruals and cash flows is good at forecasting abnormal earnings and valuing market value. To divide accruals into separate accruals also is helpful to forecast abnormal earnings and value market value. The cash flows and the accruals are different at forecasting and valuing. Key words¡GAccruals, Cash Flows, Market Value

Regulators only require banks to manage their short-term exchange rate risk stringently. A possible reason is that the prevailing capital-market methodology cannot determine the long-term exchange rate risk. Using the real performance of operating incomes, this paper investigates the impact of fluctuating foreign currencies on the values of Taiwanese banking institutions, and decomposes the overall exchange rate risk into short-term and long-term components. We not only overcome the deficiency of prior studies that have limited success in detecting significant currency exposure, but also measure correct economic exposure that firms are confronted with. Comparing with the capital market approach, we find the evidence of the relative strength of cash flows to detect currency exposure. After controlling for the impact of interest rates, we find that, over the time period examined, 61.54% of the sample firms have a significant currency exposure, which is larger than those documented by prior research. Our result also shows that the existence of significant long-term exchange rate risk is prevalent among Taiwanese banking institutions. Furthermore, US dollar (the currency of a nation which is Taiwan¡¦s largest exporting country) has an opposite effect as opposed to Japanese Yen (the currency of a nation which is Taiwan¡¦s largest importing partner). Our results have policy implications that banking institutions should manage long-term currency exposure.

Tax aggressiveness generates significant cash savings and information asymmetry. Combining these two consequences of tax aggressiveness, I suggest that tax aggressiveness is associated with higher agency costs of free cash flows that affect investment decisions. Using the conditional investment efficiency model, I find evidence that tax aggressiveness is associated with more investments in firms with high access to investable funds, thus suggesting tax aggressiveness is associated with overinvestment. I also provide evidence that stronger tax monitoring and a change in tax disclosures mitigate the relation between tax aggressiveness and overinvestment. Lastly, I find that the overinvestment is associated with lower future abnormal returns. Thus, my results suggest that poor managerial investment decision making is an unintended consequence to tax aggressiveness. Additionally, I further the need for shareholders and board of directors to exert influence to avoid compensating managers for aggressive tax strategies.

Since the dividend irrelevance theory of Miller and Modigliani (1961), academics and practitioners still have little understanding of the managerial incentives underpinning dividend policy. Black (1976) observed, “The harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don’t fit together.” <br /> <br /> This thesis aims to shed additional light on the dividend puzzle. Accordingly, two theoretical models have been developed to help explain why firms pay dividends or repurchase their own shares. The models consider the case in which the managers of a high-quality firm (firm H) and a low-quality firm (firm L) choose to use corporate cash flows to pay dividends, repurchase shares, or invest in a real project from which they can earn private benefits. I focus on the case in which firm H has a positive NPV project whereas firm L has a negative NPV project. <br /> <br /> In the first model, developed in spirit of Isagawa (2000), I show that paying dividends is a dominated strategy for firm H, regardless of the managerial weight parameter. If the manager is myopic, firm L will choose to repurchase shares at the detriment of existing shareholders. If the manager is farsighted, on the other hand, firm L will choose to pay dividends. I also consider the case in which investors are irrational in that they do not update their beliefs upon observing one firm repurchasing shares while the other firm paying dividends. The model shows that, in inefficient market, firm L will not mimic given that firm H repurchases shares since it cannot obtain any benefit from doing so. <br /> <br /> In the second model, built on Fairchild and Zhang’s (2005) work, in which the managerial payout decisions depend on the relative magnitudes of dividend and repurchase catering premia, I demonstrate that a myopic manager of firm H may pass up a positive NPV project in order to cater to investor demand for dividends or share repurchases (an adverse selection problem). In addition, I show that the agency cost of free cash flow can be mitigated if the dividend-catering premium is sufficiently high. That is, firm L’s manager will have a strong incentive to return excess cash to shareholders rather than invest it in a negative NPV project. <br /> <br /> Then, I investigate dividend changes in Thailand over the period 2002-2005. To test the signalling and free cash flow hypotheses, I first analyse profitability changes around dividend changes and benchmark them with control firms, and examine the relation between dividend changes and the past and future profitability. Consistent with Benartzi et al.’s (1997) evidence in the U.S., dividend changes in Thailand do not signal future profitability but rather the past performance. Then, I examine the determinants of dividend changes and firm’s decision to change dividends. I also investigate the short-run and long-run stock price performance of dividend-changing firms, and the relation between announcement returns and hypothesised independent variables. Finally, I examine firms’ investment behaviour following dividend changes. The results do not support the view that dividend changes signal future profitability. Overall, the findings are broadly consistent with the free cash flow hypothesis rather than the signalling hypothesis. <br /> <br /> Additionally, I provide preliminary evidence on open-market share repurchases (OMRs) in Thailand over the period December 2001 to January 2007. I find that stock prices react positively to OMR announcements and continue to increase in the longer term, suggesting that stock market underreacts to the signal conveyed by the managers of repurchasing firms. Comparing the actual repurchase cost with the costs of benchmark portfolios, I find that the actual repurchase cost is the lowest. This finding suggests that the managers of repurchasing firms have substantial ability to time the market.

In the first essay, "The Source of Cash and Its Marginal Value," we study the relation between the source of firms' cash holdings and the value of the cash to shareholders. The marginal value of a dollar of cash holdings depends on the source of the dollar: $1.00 of cash has a value of $1.27 when it is from operations, $0.80 when from financing, and $0.46 when from investing. Within the same source, the marginal value of an added dollar of cash holdings is significantly higher than the absolute value of a subtracted dollar. Shareholders of financially constrained or distressed firms value incremental cash holdings from almost any source more highly than do shareholders of unconstrained or stronger firms, but differences in value remain across the sources of cash within each subsample. Agency costs and information asymmetry are two frictions that appear to have the largest impact upon the value of cash. In the second essay, "Explanations for Diverging Values of Cash," we further explain the differing values of cash found in the first essay. Intertemporal relationships among the sources and uses of cash provide a rational basis for shareholders to assign different values of cash based on the source. Sources of cash provide information about likely uses of cash up to two to three years in the future, and many of the intertemporal relations are statistically and economically significant. Likewise, prior uses of cash relate significantly to later uses of cash. Past sources of cash inform investors about likely future sources, even up to five years into the future. The fact that different kinds of cash flows have predictive power for future cash flows helps explain the wide range of the values of cash associated with different sources.

Σκοπός της εργασίας αυτής είναι να αναδείξει την σπουδαιότητα του ΔΛΠ 7 για τις Ταμειακές Ροές στην χρηματοοικονομική ανάλυση καθώς επίσης να παραθέσει μια καταγραφή της διεθνής έρευνας σχετικά με το πληροφοριακό περιεχόμενο των Ταμειακών Ροών. Εν συνεχεία γίνεται μια προσπάθεια να αποτιμηθεί η χρησιμότητα των Ταμειακών Ροών από Λειτουργικές, Επενδυτικές και Χρηματοοικονομικές Δραστηριότητες και δίνεται ένα παράδειγμα εμπέδωσης της Κατάστασης Ταμειακών Ροών με την άμεση και την έμμεση μέθοδο. Στην εμπειρική έρευνα, αναλύονται δεδομένα από το Χρηματιστήριο Αθηνών την περίοδο 2005-2007 με έμφαση στα Κέρδη προ Φόρων και στις Λειτουργικές Ταμειακές Ροές. Ειδικότερα εξετάζεται συσχέτιση στα πρόσημα των δύο μεταβλητών με το πρόσημο των αποδόσεων των μετοχών. Τέλος, εξετάζεται η προβλεπτική ικανότητα των Ταμειακών Ροών από Λειτουργικές Δραστηριότητες στα μελλοντικά κέρδη προ φόρων. / Purpose of this assignment is to highlight the importance of the IAS 7 for the Cash Flows Statements on the financial analysis as well to quote a notation of the international research for the “value relevance” of the Cash Flows. In addition to this, there is an attempt to evaluate the usefulness of the Cash Flows from Operating, Investing and Financial Activities and an example of Cash Flow Statement reporting with direct and indirect method is given. In the empirical research, data from the Stock market of Athens for the period of 2005-2007 is analyzed with emphasis to Earnings before Taxes and the Cash Flows from Operating Activities. Specifically a correlation among the operator of the above figures with the operator of the stock returns is examined. In the final part it is investigated the predicted capability of the Cash Flows from Operating Activities to future earnings before taxes.

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This research investigated the ability of current earnings and cash flows to predict future cash flows and future share prices. The investigation was conducted used financial information of JSE listed companies over a period between 2001 and 2011. The objectives of the research were to establish the predictive ability of current earnings and cash flows on future cash flows and share prices. This study was motivated by the findings of Kim and Kross (2005) where they consolidated the earlier findings by Collins et al. (1997) and Dechow et al. (1998).It was predetermined that the study would add to the body of knowledge in financial statements analysis and the application of earnings and cash flows as the predictive financial variables, Earnings are regarded as an essential measure of company of company‘s performance and cash flows from operations as a measure of the company‘s ability to generate cash flows from their operations. It was noted that investors do study and analyse these financial elements when investment decisions are made (Higgins, 2009; De Fond and Hung, 2003).It was found that earnings did not have the predictive ability on future cash flows but proved to possess high predictive power over future share prices. The results were not in agreement with the previous studied on the same subject. The average of R-square on current earnings ability to predict future cash flows were R2=0.27 and 0.38 in the long run and short run, respectively. The predictive ability on future share prices were R2=0.44 and 0.54 in the long and short run, respectively. Current cash flows on the hand indicated low predictive ability on future share price where the average R2=0.24 and 0.33 in the long and short run respectively. The predictive ability on current cash flows over future cash flows proved to be higher, which was not consistent with the previous researchers. The average R2 were 0.44 and 0.46 in the long and short run. It was noted that these financial elements proved to possess higher predictive abilities in the short run. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

Le Capital-Investissement et plus particulièrement les opérations de LBO, occupent une place importante dans l'économie mondiale et française. Ce travail de recherche a pour objet l'analyse de l'impact des leviers organisationnels et de gouvernance sur la performance opérationnelle et la rentabilité des entreprises françaises sous LBO. Nous présentons ainsi, en premier lieu, dans les deux premiers chapitres de cette thèse, une revue complète de la littérature, ainsi que le modèle théorique de l'impact des leviers organisationnels et de gouvernance sur la performance opérationnelle et la rentabilité des entreprises sous LBO en privilégiant une approche actionnariale de la gouvernance.Ensuite, dans le cadre des troisième et quatrième chapitres de cette thèse, nous examinons de façon empirique, d'une part, l'impact de la mise en place des opérations de LBO sur la performance opérationnelle des entreprises françaises, et, d'autre part, les effets des leviers organisationnels et de gouvernance sur la rentabilité des entreprises françaises sous LBO.Nos résultats confirment en partie les résultats anglo-saxons concernant l'impact positif des opérations de LBO sur la performance de la société cible, ils sont obtenus en effectuant une double analyse comparative : la première en comparant l'évolution de la performance avant et après la mise en place du LBO, et la deuxième en effectuant une comparaison par rapport à un groupe de contrôle composé d'entreprises aux caractéristiques comparables mais qui n'ont pas fait l'objet d'un LBO.Enfin, nous proposons un modèle explicatif des effets des leviers organisationnels et de gouvernance sur la rentabilité des entreprises sous LBO. / Private Equity, especially Leverage Buyout activity (LBO), is now an important concern in the world economy and also in France. This kind of investment is an important alternative to capital market.The main purpose of this thesis is to examine the effects of corporate governance and organizational mechanisms on the performance of French firms leveraged buyout.We presented in the first part of this thesis, the first and second chapter of it, the history of the emergence of these investments in the world and especially in France, and an overview of the literature on private equity and leveraged buyouts, focusing on our theoretical framework which is based on corporate governance theories, especially on agency theory and financial performance.Moreover, we discussed the literature about the relation between operating performance, corporate governance and Leverage Buyout. As part of this thesis and in the third and fourth chapters, we proposed an empirical study of the impact of LBO on operating performance.This research also proposes a new approach to the relationship governance-performance by a financial modelling of the relation between corporate governance and performance in the case of leveraged buyout firms in France.This thesis is a contribution to the Leverage Buyout and Private Equity literature from a theoretical and empirical point of view. It also has implications for the managers of private firms.

The aim of this thesis is to establish the value of the company for their owners. The thesis is divided into two parts: theorical and practical. In the first part the value, its creation and the methods used for valuation are defined. In the second part, the company is valuated based on the methodology of discounted cash flows.