Abstract

https://ssrn.com/abstract=1480248
 
 

References (26)



 
 

Citations (10)



 


 



Accrual Reversals, Earnings and Stock Returns


Eric J. Allen


University of Southern California - Leventhal School of Accounting

Chad R. Larson


University of Houston - Department of Accountancy & Taxation

Richard G. Sloan


University of California, Berkeley - Accounting Group

April 2, 2013


Abstract:     
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) are not associated with security mispricing. We show that the lower persistence of the accrual component of earnings and associated mispricing documented in Sloan (1996) are driven by a combination of accruals related to firm growth and accrual estimation error.

Number of Pages in PDF File: 47

Keywords: Accruals, Accrual Reversals, Earnings, Stock Returns, Inventory

JEL Classification: M41, G12


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Date posted: September 29, 2009 ; Last revised: November 11, 2015

Suggested Citation

Allen, Eric J. and Larson, Chad R. and Sloan, Richard G., Accrual Reversals, Earnings and Stock Returns (April 2, 2013). Available at SSRN: https://ssrn.com/abstract=1480248 or http://dx.doi.org/10.2139/ssrn.1480248

Contact Information

Eric J. Allen
University of Southern California - Leventhal School of Accounting ( email )
Los Angeles, CA 90089-0441
United States
Chad Russell Larson
University of Houston - Department of Accountancy & Taxation ( email )
Bauer College of Business
4800 Calhoun Road
Houston, TX 77204
United States
Richard G. Sloan (Contact Author)
University of California, Berkeley - Accounting Group ( email )
Haas School of Business
Berkeley, CA 94720
United States
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