The relative value relevance of earnings, book values and cash flows in the Polish banking secto

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Published:
Dec 17, 2015
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Vol. 3 No. 4 (2015)
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Piotr Bolibok
Department of Banking and Finance, The John Paul II Catholic University of Lublin
https://orcid.org/0000-0002-5649-181X

DOI: https://doi.org/10.22630/ZFIR.2015.3.4.29
Keywords : value relevance; banks; book values; earnings; cash flows
Abstract
The paper aims to investigate the relative value relevance of the fundamental items from the financial statements of banks: net earnings, book values of equity and cash flows in the context of the capital market of Poland. The examined sample covered all domestically-based banks listed on the Warsaw Stock Exchange over the period 1997–2014. The research methods employed involved parametric and non-parametric analyses of correlation, as well as simple and stepwise multiple linear regression. The obtained results are consistent with the findings of prior international studies and indicate that the market value of banks is most strongly related to book values of equity followed by net earnings. On the other hand cash flows reported by banks seem to be of a limited informativeness for equity investors as they do not provide any significant incremental explanatory power beyond that conveyed by book values of equity and net earnings.

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How to Cite
Bolibok, P. (2015). The relative value relevance of earnings, book values and cash flows in the Polish banking secto. Zarządzanie Finansami I Rachunkowość, 3(4), 19–31. https://doi.org/10.22630/ZFIR.2015.3.4.29
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