In Section 3.7.1, the text refers to the study of Kim and Cross, who reported that the ability of current earnings to predict next period’s operating cash flows exceeds the ability of current operating cash flows to predict next period’s operating cash flows. Give an explanation for this result.
Answer to relevant QuestionsGive some reasons why the off- main diagonal probabilities of an information system such as that depicted in Table 3.2 are non- zero. Use the concepts of relevance and reliability in your answer. Explain why an information ...a1: Buy bonds of Risky Mining Ltd. These pay 14.4% interest, unless Risky goes bankrupt, in which case Marie will lose her principal and interest. a2: Buy savings bonds, paying 6.4% interest. Marie assesses her prior ...Two firms, of the same size and risk, release their annual reports on the same day. It turns out that they each report the same amount of net income. Following the release, the share price of one firm rose strongly while the ...The article “ GM to Take Charge of $ 20.8- Billion” here reproduced from The Globe and Mail ( February 2, 1993) describes the potential impact of SFAS 106, “ Accounting for Postretirement Benefits Other Than ...Is the market’s anticipation of the GN/ BN in earnings during 12 months prior to the month of release of the earnings release, as Ball and Brown found in Figure 5.3, consistent with a correlation or a causation argument ...
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