This study explores the relationship between company earnings management and the relative value relevance of book value and earnings. The differential effect on the value relevance of earnings management (EM) from 2014 to 2018 for all firms listed on the Saudi Stock Exchange (Tadawul) is...

Because stock liquidity should improve managers’ access to external information, we examine whether managers of firms with higher stock liquidity form more accurate accrual estimates. Consistent with our expectations, we find that accrual estimation errors of firms with more liquid stocks are...

Corporate income tax (CIT), as an important economic instrument in most jurisdictions, constitutes a significant portion of financial costs in business operations. It is known that the structure of tax function, accounting method and loss carryover policy have significant impacts on a firm's...

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...

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 define accrual duration as the length of time between an accrual and its associated cash flow. Accrual duration and accrual discretion are inextricably linked by the fundamentals of the accrual process because one side of an accrual pair is pinned down by the sign and magnitude of its...

Considerable research has been devoted to the evaluation of accrual accounting, with an accrual-cash flow relation at the center of the investigation. However, much of the research is based on misconceptions. First, accruals are defined as changes in balance sheet items, but these are not the...

Previous research has shown that costs exhibit a sticky behavior: Costs increases when sales rise are larger than cost decreases when sales drop. Given that the traditional accrual models rely on the assumption of costs responding equally to sales increases and to sales decreases, the sticky...

Recent work shows that the role of accrual accounting in mitigating the timing differences between cash flows and operating performance has been disappearing over time (Bushman, Lerman, and Zhang 2016). We argue that even though there is noise in the accrual accounting process, sophisticated...

This paper aims to present the effect of life cycle on financial reporting quality (FRQ). Discretionary accruals, small profit, and audit aggressiveness were used to test the FRQ from different approaches for Borsa Istanbul-listed companies between 2008 and 2017. The sample comprises 1,645...

This paper investigates accrual earnings management (AEM) and real earnings management (REM) in family businesses (FB) in Saudi Arabia. Current literature indicates that minority rights are confiscated by the controlling shareholders in a business environment weak to protect investors. Based on...

The transition from cash to accrual accounting is said to change a government's perception of its budget quite fundamentally. Although an exorbitant number of governments have reformed the mode of accounting at high costs in past years, reliable empirical evidence of consequences on their...

Purpose: This research aimed to analyse the effect of top management support, training and communication on the implementation of accrual accounting. Design/methodology/approach: The hypotheses of the study were tested using the survey data from 63 working unit in Cianjur Regency. The instrument...

Purpose: Beginning from the assumption that accrual accounting is useful in ensuring the high performance of management systems, this article investigates explanatory factors concerning the level of accrual accounting adoption in municipalities on the Indonesia island of Java....

We provide an applied introduction to Bayesian estimation methods for empirical accounting research. To showcase the methods, we compare and contrast the estimation of accruals models via a Bayesian approach with the literature's standard approach. The standard approach takes a given model of...

The transition from cash to accrual accounting is said to change a government's perception of its budget quite fundamentally. Although an exorbitant number of governments have reformed the mode of accounting at high costs in past years, reliable empirical evidence of consequences on their...

This study examines the impact of accounting comparability on financial reporting quality and the extent to which financial statement users understand the implications of firms' accruals. We predict that comparability improves the information environment, which not only enhances the ability of...

Sloan (1996), Richardson et al. (2005, 2006) examine how firms' accruals relate to subsequent financial performance. They identify a negative correlation and attribute it to accruals lack of reliability. This paper considers the issue from a different starting point: we forecast sales and...

In accordance with the mandate of Law No. 17 of 2003 and PP No. 71 of 2010, starting in 2015, regional governments must use the accrual basis. BPKP Representatives of Papua Province apply an accrual basis in the preparation and presentation of Balance Sheets, Operational Reports, and Changes in...

We examine the information content of high accruals momentum defined as a string of high discretionary accruals for four consecutive years. We find that firms that consistently report high levels of discretionary accruals experience low subsequent returns. The results are robust after we control...

This paper investigates the evolution of accruals ability to improve the information content of earnings over cash flows, as reflected in market prices. We documented a pronounced decline in the price association of earnings relative to cash flows. We find that, after year 2000, cash flows have...

I evaluate the role of accrual accounting in improving firms' production decisions and resource allocation across firms. I introduce both cash flow and accounting earnings as imperfect measures of performance into a general equilibrium model with heterogeneous firms under imperfect information....

Purpose This study aims to examine whether International Financial Reporting Standards (IFRS) convergence process adds value to the accounting quality dimensions, including accruals quality, earnings smoothing, timely loss recognition and earnings persistence. Design/methodology/approach It...

Many governments have replaced traditional cash-based accounting with some form of accrual-based accounting system. However, empirical evidence on the effects of the public accounting system on fiscal policy is scarce. Following rules by the federal states, municipalities in Germany have adopted...

Purpose: This study aims to examine the relationship between top management support, implementation costs, and effective project leader and the level of accrual accounting adoption in Indonesia's municipalities. Design/methodology/approach: The hypotheses of the study were tested using the...

Many governments have replaced traditional cash-based accounting with some form of accrual-based accounting system. However, empirical evidence on the effects of the public accounting system on fiscal policy is scarce. Following rules by the federal states, municipalities in Germany have adopted...

Empirical research from the first years following SOX suggests that firms improve accruals quality following restatements, but both the number and materiality of restatements have declined since then. This decline may affect firms' responses to restatements and hence we re-examine whether...

We seek evidence of a link between accruals-based earnings quality (EQ) and cost of capital by examining two classes of shares traded in China's segregated markets during 1995-2000. The A- and B-shares introduced respectively for domestic and foreign investors carry identical cash flow rights,...

We estimate the firm-level rate at which working capital accruals convert into future cash flows. These conversion rates determine the expected cash value of a dollar of working capital accruals. For firms whose accrual innovations reverse within one year, we find that, on average, a one dollar...

In recent decades, the dissemination and the adoption of new public management (NPM) have been significant within the new public sector. One key innovation is the adoption of accrual accounting from business enterprise. The unresolved question is, what does accrual accounting mean in practice...