Abstract

http://ssrn.com/abstract=1299084
 
 

References (36)



 
 

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Investor Sentiment, Accruals Anomaly, and Accruals Management


Ashiq Ali


University of Texas at Dallas - Naveen Jindal School of Management

Umit G. Gurun


University of Texas at Dallas - Naveen Jindal School of Management

October 10, 2008

Journal of Accounting, Auditing and Finance, Forthcoming

Abstract:     
This study examines the effect of investor sentiment on the accruals anomaly. We find that for small stocks mispricing per unit of accruals is greater in high sentiment periods as compared to low sentiment periods. This result is consistent with the notion that in high sentiment periods individual investors pay less attention towards understanding the accruals and cash flow components of earnings. This effect is observed primarily for small stocks because these stocks are more likely to be followed by individual investors, who tend to have limited attention. We also find that for small stocks reported accruals are greater during high sentiment periods as compared to low sentiment periods, suggesting that managers exploit the greater overvaluation per unit of accruals during high sentiment periods.

Number of Pages in PDF File: 27

Keywords: Accruals, Mispricing, Investor Sentiment, Accruals Management

JEL Classification: G14, M41, M43

Accepted Paper Series





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Date posted: November 13, 2008  

Suggested Citation

Ali, Ashiq and Gurun, Umit G., Investor Sentiment, Accruals Anomaly, and Accruals Management (October 10, 2008). Journal of Accounting, Auditing and Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1299084

Contact Information

Ashiq Ali
University of Texas at Dallas - Naveen Jindal School of Management ( email )
800 West Campbell Road, SM41
Richardson, TX 75080-3021
United States
972-883-6360 (Phone)
972-883-6811 (Fax)
HOME PAGE: http://www.utdallas.edu/~axa042200/
Umit G. Gurun (Contact Author)
University of Texas at Dallas - Naveen Jindal School of Management ( email )
P.O. Box 830688
Richardson, TX 75083-0688
United States
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