We examine the differences in the use of discretionary accruals between firms with in-the-money stock options and firms with out-of-money (i.e., underwater) stock options over a longer time horizon. We contend that management anticipating action from the board of directors may use less (more)...

This paper investigates accounting conservatism's effects on accrual persistence and accrual-related future stock returns. We find conservatism significantly increases accrual persistence and accrual-related future stock returns and more so in high accrual firms. We attribute this to...