What Determines the Variability of Accounting Accruals?

What Determines the Variability of Accounting Accruals? The variability of accounting accruals provides a measure of the normal level of managers’ accounting discretion and has important implications for event studies of earnings management. We examine how this measure is related to the economic factors including both firm characteristics and attributes of the disclosure environment. We show that the variability of accruals is related to firm size, leverage, variability of cash flows, operating cycle, growth, and other factors. Significant industry differences and temporal patterns are also found. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

What Determines the Variability of Accounting Accruals?

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2005 by Springer Science + Business Media, Inc.
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-005-6869-1
Publisher site
See Article on Publisher Site

Abstract

The variability of accounting accruals provides a measure of the normal level of managers’ accounting discretion and has important implications for event studies of earnings management. We examine how this measure is related to the economic factors including both firm characteristics and attributes of the disclosure environment. We show that the variability of accruals is related to firm size, leverage, variability of cash flows, operating cycle, growth, and other factors. Significant industry differences and temporal patterns are also found.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Jan 1, 2005

References

  • The Conservatism Principle and the Asymmetric Timeliness of Earnings
    Basu, S.
  • The Effect of Audit Quality on Earnings Management
    Becker, C.; DeFond, M.; Jiambalvo, J.; Subramanyam, D. R.
  • Income Smoothing and Underperformance in Initial Public Offerings
    Chaney, P. K.; Lewis, C. M.
  • Detecting Earnings Management
    Dechow, P.; Sloan, R.; Sweeney, A.

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