The impact of Covid-19 pandemic on the value relevance of cash flows: evidence from banks

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)


Purpose: This paper is motivated by the ongoing debate on the value relevance of cash flow statement (CFS) between bank regulators, on one hand, and accounting standard setters, on the other hand. The importance and usefulness of cash flows during economic turmoil exacerbated by the Covid-19 pandemic has recently gained attention. Hence, this paper investigates the impact of Covid-19 pandemic on the value relevance of cash flows (CF) beyond accounting earnings and book equity. Design/methodology/approach: A panel of 236 bank-year observations is examined for value relevance in emerging capital markets of Gulf Cooperation Council (GCC) countries. Using value relevance regression, operating and non-operating CF items are tested for value relevance beyond earnings and book value of equity during the periods 2018–2019 (pre-pandemic) and 2020–2021 (pandemic). Findings: There is limited value relevance of CF beyond accounting earnings and the book value of equity. The distinction between operating and non-operating CF is not informative. However, the value relevance is significant during the pandemic, indicating that investors rely on CF for valuation purposes at times of uncertainty, corroborating further research on CF distress predictive ability. Originality/value: This paper provides novel evidence on value relevance of CF and its superiority to accounting earnings and equity values during times of uncertainty. It extends a small body of research in the banking sector in emerging markets. Hence, it complements prior literature and has practical implications to accounting standard setters and bank regulators in emerging markets.

Original languageEnglish
JournalInternational Journal of Emerging Markets
Publication statusAccepted/In press - 2023


  • Banks
  • Cash flows
  • Covid-19 pandemic
  • Emerging markets
  • Informativeness
  • Value relevance

ASJC Scopus subject areas

  • Business and International Management
  • General Business,Management and Accounting


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