Earnings Persistence, Accruals and Managerial Share Ownership

28 Pages Posted: 14 Aug 2008

See all articles by Rosalyn Oei

Rosalyn Oei

affiliation not provided to SSRN

Alan L. Ramsay

Monash University - Department of Accounting

Paul R. Mather

La Trobe University

Date Written: 2007-09-16

Abstract

We investigate the relationship between earnings persistence and a broad measure of total accruals (TACC). We propose and find that in Australia, TACC is less persistent than cash flows. We further propose that the persistence of accrual components is positively associated with the reliability of those components. However, we find that the least reliable accrual component has the greatest persistence and suggest possible reasons for this. We then investigate the relationship between earnings persistence and managerial share ownership, but find no evidence of a consistent, strong relationship. Rather, for the non-current operating accruals we find evidence consistent with incentive alignment for large firms with high operating cash flows, whereas for small firms we find evidence consistent with efficient contracting.

Suggested Citation

Oei, Rosalyn and Ramsay, Alan and Mather, Paul R., Earnings Persistence, Accruals and Managerial Share Ownership (2007-09-16). Accounting & Finance, Vol. 48, Issue 3, pp. 475-502, September 2008, Available at SSRN: https://ssrn.com/abstract=1224068 or http://dx.doi.org/10.1111/j.1467-629X.2007.00248.x

Rosalyn Oei (Contact Author)

affiliation not provided to SSRN

Alan Ramsay

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia

Paul R. Mather

La Trobe University ( email )

School of Accounting
Bundoora
Melbourne, Victoria 3086
Australia
+61-3-9479-5264 (Phone)

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