Defining, Measuring and Modeling Accruals: A Guide for Researchers

62 Pages Posted: 15 Apr 2017 Last revised: 28 Mar 2018

See all articles by Chad R. Larson

Chad R. Larson

University of Houston - Department of Accountancy & Taxation

Richard G. Sloan

University of Southern California - Leventhal School of Accounting

Jenny Zha Giedt

George Washington University - School of Business

Date Written: January 11, 2018

Abstract

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

Larson, Chad Russell and Sloan, Richard G. and Zha Giedt, Jenny, Defining, Measuring and Modeling Accruals: A Guide for Researchers (January 11, 2018). Available at SSRN: https://ssrn.com/abstract=2952601 or http://dx.doi.org/10.2139/ssrn.2952601

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 Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States

Jenny Zha Giedt

George Washington University - School of Business ( email )

Washington, DC 20052
United States

HOME PAGE: http://www.jennyzha.com

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