Abstract

http://ssrn.com/abstract=232721
 
 

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Citations (39)



 


 



Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10-Q Filings


Eli Bartov


New York University

Carol A. Marquardt


City University of New York (CUNY) – Baruch College

Steven Balsam


Temple University - Department of Accounting

June 2000


Abstract:     
The release of the full set of financial statements in Form 10-Q provides investors with the data necessary to estimate the discretionary portion of earnings, thereby allowing them to better assess the integrity of reported quarterly earnings. We thus expect a negative association between unexpected discretionary accruals estimated using 10-Q disclosures and stock returns around 10-Q filing dates. Consistent with our expectations, we document a negative association between unexpected discretionary accruals and cumulative abnormal returns over a short window around the 10-Q filing date. Furthermore, this association varies systematically with investor sophistication. Finally, results from portfolio tests indicate that this association is economically as well as statistically significant. One interpretation of our findings is that accruals management has substantial valuation consequences, which are quickly impounded into stock prices.

Number of Pages in PDF File: 38

JEL Classification: G12, G14, M41, M43, M45

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Date posted: July 19, 2000  

Suggested Citation

Bartov, Eli and Marquardt, Carol A. and Balsam, Steven, Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10-Q Filings (June 2000). Available at SSRN: http://ssrn.com/abstract=232721 or http://dx.doi.org/10.2139/ssrn.232721

Contact Information

Eli Bartov (Contact Author)
New York University ( email )
40 W. 4th St., 423
New York, NY 10012
United States
212-995-4004 (Fax)
Carol Marquardt
City University of New York (CUNY) – Baruch College ( email )
One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
646-312-3241 (Phone)
Steven Balsam
Temple University - Department of Accounting ( email )
306 Speakman Hall
Philadelphia, PA 19122
United States
215-204-5574 (Phone)
215-204-5587 (Fax)
HOME PAGE: http://www.sbm.temple.edu/~drb/

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