Recent UK information content studies have provided evidence of a significant relationship between earnings and share prices, as in the US, but have also identified an apparent lack of information content for operating cash flow, which is in marked contrast to findings from US research. This paper provides direct evidence on the relationship between earnings, funds flows and cash flows in the UK during the period 1965-84, using tests of association and predictive tests based on a research methodology applied by Bowen, Burgstahler and Daley (1986) to US data. The results provide UK evidence on the contemporaneous and predictive relationships between measures of earnings, funds flows and cash flows which are generally consistent with the US findings of Bowen et al. and which do not support the view that earnings in the UK are superior to cash flows as predictors of future cash Rows.

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This article analyses the risk management function in UK quoted banks and other fi nancial institutions with specifi c reference to the role of non-executive directors and relevant committees of the board of directors. We discuss defi nitions of risk and uncertainty and refer to recommendations expressed in corporate governance codes concerning the role of risk management. We next discuss where in the fi rm the risk management function should be located and the extent to which this is a relevant function for non-executive directors. We conclude that risk management is not a legitimate function for non-executive directors, but should be the primary responsibility of the executive directors. Nevertheless, non-executives may have a minor role to play in risk assessment, evaluation and monitoring.

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