The Value-Relevance of Operating Cash Flow : Comparative Study of Banks’ Listed on the Egyptian and Beirut Stock Exchanges

ABSTRACT This study examines whether the value relevance of Operating Cash Flows (OCF) varies between banks listed in the Egyptian Stock Exchange (ESE) as a representative of emerging markets and banks listed in the Beirut Stock Exchange (BSE) as a representative of frontier markets. We test our hypotheses using a sample of 49 bank-year observations in the ESE, and a sample of 24 bank-year observations in the BSE for the 2013-2016 periods. Using the modified Ohlson's (1995) model, we find that OCF is positively and significantly associated with stock prices in the ESE and in the BSE. Furthermore, regression reveals that earnings are higher concerning value- relevant for banks listed in the ESE compared with the BSE. Additionally, the Shapley value exposes the contribution of the interaction of OCF with banks’ size to R2 in the ESE. We provide empirical evidence that the OCF is value-relevant in emerging and frontier markets