The purpose of this paper is to investigate the relative and incremental value relevance of book value, accounting earnings and cash flows in security prices . The study basically uses Myers (1977), Ohlson (1995) and Feltham and Ohlson (1995) valuation model and the paper perform s analyses for all samples divided into profit/loss firms and earnings managed/non-earnings managed firms to observe changes in value relevance over the periods of 1994-2005 in Korean stock markets(4,865 firm-year observations) .

The empirical results of the paper indicate that book value is the most value relevant variable and cash flows have more value relevance than accounting earnings in all samples, subsamples and periods. The results also show that combined value relevance of book value and cash flows is more value relevant than that of book value and accounting earnings, suggesting that cash flows can be a substitute for accounting earnings in equity valuation model. The important contribution of the study is documenting the deteriorated value relevance of accounting earnings and the increased value relevance of cash flows in equity valuation. This may be just limited to the period of 1994-2005 in Korean stock markets, or this could be the true pattern in which accounting earnings play no significant role in security prices.