There are several explanations for why accruals persist into earnings at lower rates than cash flows. These include that accruals contain estimation error, diminishing returns to investment, and product-markets shocks. We predict that the mixed attribute GAAP measurement model along with the...

We document pervasive evidence of reversals in firm-level working capital accruals over adjacent fiscal years. We demonstrate that the majority of these accrual reversals relate to ‘good' accruals that: (i) correctly anticipate future benefits; (ii) lead to higher earnings persistence; and (iii)...

A large body of empirical research in accounting investigates the causes and consequences of accruals quality, reaching numerous influential conclusions. Yet little work has been done to systematically evaluate the validity of the underlying measures of accruals quality. We evaluate these...