Disclosure requirements and voluntarily reporting of cash flow information in Greece

Abstract

Purpose – To review the disclosure requirements for cash flow reporting in Greece and the willingness of Greek companies to voluntarily disclose cash flow information. Design/methodology/approach – The empirical research was conducted on a sample of 97 Greek firms listed in the Athens Stock Exchange by examining the relation between cash flows and other measures of profitability for year 1994 when IAS No. 7 was set in effect. Findings – The results show that despite the fact that cash flows are more informative than an accruals definition of profits, in deciding about financial policy issues Greek companies show an increased preference to funds flows defined in terms of working capital. Practical implications – The publication of a cash flow statement may reveal that many listed companies in Greece are not as robust as the balance sheet and the income statement potentially indicates. Thus, the main conclusion of the paper is that publication of the cash flow statement in Greece should become mandatory. Originality/value – The present study shows that, despite the desire of the regulatory authorities that investors receive adequate and relevant information, voluntarily cash flow disclosure is not apparent in Greece because cash flows reveal financial problems that other measures of performance do not. Thus, it provides directions for standard setters in making mandatory the publication of cash flow statement in Greece.