Defining, Measuring and Modeling Accruals: A Guide for Researchers
62 Pages Posted: 15 Apr 2017 Last revised: 28 Mar 2018
Date Written: January 11, 2018
Research on accounting accruals is pervasive. Yet the measurement and modeling of accruals has developed in an ad hoc manner, resulting in a fragmented and incomplete body of research. Our goal is to rectify this situation by (i) providing a comprehensive definition of accruals, (ii) formulating a corresponding empirical measure of accruals, (iii) offering two decompositions of our measure of accruals that encapsulate the major classes of accruals studied in previous research, (iv) combining and expanding prior models of the fundamental determinants of accruals into one parsimonious model, and (v) identifying the primary determinants of each of the major classes of accruals. We close by providing guidance for researchers in tailoring the selection of accruals to the research question at hand.
Keywords: Accruals, Cash Flows, Earnings
JEL Classification: M41
Suggested Citation: Suggested Citation