| Summary: | 碩士 === 亞洲大學 === 財務金融學系碩士班 === 99 === This paper discusses whether or not incremental information contents are provided to financial statements users when the direct method is used to disclose the components of operating cash flow in Taiwan. In this study, the earnings are disaggregated to the cash flow of operating activities and the components of accrued items. In addition, the components of cash flow of operating activities consist of cash receipts from customers, cash paid to suppliers and employees, income tax expense, interest payment, interest received, dividends received, other income and other expenses. We also compare the aggregate models of total net operating cash flow and the disaggregated models of components of net operating cash flow and their future earning explanatory capability.
The empirical results demonstrate that the disaggregated models show higher explanatory power and predictive ability for future earnings. According to the median of discretionary accruals or discretionary current accruals, the sample companies further are divided to high earnings management firms and low earnings management firms. Moreover, the sample companies are divided to listed companies and over-the-counter companies. The empirical results also indicate that the disaggregated models demonstrate higher earning predictive ability. These findings can provide users with information that is helpful for future cash flow predictions. Such information can also be used as reference for enterprise value evaluation, investment or loan decision. Furthermore, the direct method aims to disclose operating cash flow, which is provided with incremental information contents. The results can also be used as reference material that can help government authorities formulate financial disclosure regulations.
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