![]() The finding also supports Ross (1977) and Leland and Pyles' (1977) signaling hypothesis. It is consistent to Taiwan's booming economy. The phenomenon implies that the market appreciates not only the cash inflows from operating activities, but also cash inflows from new issues of bonds or stocks for further expansion. Examining the association between stock returns and cash flow information, the results indicate that stock returns are positively associated with cash flows from both operating and financing activities. results that stock dividends may act as a signal for favorable future earnings. The results also support McNicholes and Dravid's (1990) and etc. The fast booming economy as well as Taiwan's free tax rate on capital gains are the explanations for the different findings. Cash dividends, however, are relatively less important information to the market. studies, Taiwan's stock returns are strongly associated with stock dividends. It is a possible common phenomenon in a booming economy. The market views non-operating income, mostly from disposal of real-estate and short-term equity investments, as a complementary factor to operating income. The usefulness of non-operating income to explain stock returns is due mainly to its recurrent characteristic in Taiwan. results, however, both operating income and non-operating income are positively related to stock returns. studies, the study shows that earnings data is key information for investors. The testing period is from 1990 to 1994, right after the promulgation of Taiwan's accounting standard for statement of cash flows in 1989. Lessee’s amortization of right-of-use assets (see FSP 6.9.The study uses Taiwan's stock market, a newly developed market with different characteristics from that of the U.S., as an experimental case to examine the influences of the market's characteristics on the relationship between stock returns and fundamental accounting information, such as earnings, dividends and cash flows.Depreciation and amortization relating to fixed assets, definite-lived intangible assets, capital leases, premiums, or discounts on debt (including debt issuance costs).Adjustments for noncash items in the reconciliation of net income to net cash flows from operating activities may include items such as:.In addition, as discussed in ASC 230-10-50-2, when the indirect method is used, amounts of interest paid (net of amounts capitalized) and income taxes paid during the period must be disclosed, either on the face of the statement of cash flow or in the footnotes. Instead, only the reconciliation of net income to net operating activities, as described above, is reported. As discussed in ASC 230-10-45-25 and ASC 230-10-45-28, when the indirect method is used, a reporting entity does not report the gross cash receipts and gross payments required by the direct method.All items included in net income that do not affect operating cash receipts and payments (for example, all items for which cash effects are related to investing or financing activities (e.g., depreciation, amortization, gains or losses on dispositions of long-lived assets, and foreign currency gains and losses from the retirement of foreign denominated debt)).All deferrals of past operating cash receipts and payments, and all accruals of expected future operating cash receipts and payments (for example, changes during the period in receivables and payables pertaining to operating activities).The reconciliation removes the effects of the following: Net income, including earnings attributable to the controlling and noncontrolling interests, is the starting point to reconcile cash flows from operating activities. To illustrate how operating cash flows (prepared on the cash basis of accounting) relate to net income (prepared on the accrual method of accounting), as discussed in ASC 230-10-45-28, the direct method also requires a reconciliation of net income to net cash flows from operating activities. Transfers and servicing of financial assets Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12) Insurance contracts for insurance entities (post ASU 2018-12) ![]() IFRS and US GAAP: Similarities and differences Business combinations and noncontrolling interestsĮquity method investments and joint ventures
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