Accruals management under changing regimes of reporting financial performance

We contribute to the earnings management literature and provide insights for accounting regulatorsby investigating the impact of FRS3 on accruals management by UK firms. FRS3 mandated net incomeper share, whilst allowing the release of incremental information on sustainable profitability. Consistentwith our main prediction, we document a significant decline in the use of abnormal working capitalaccruals (AWCAs) to offset temporary shocks in operating performance post-FRS3.....