Fundamentals of Accounting Losses

51 Pages Posted: 29 Jan 2002

See all articles by April Klein

April Klein

New York University (NYU) - Department of Accounting

Carol A. Marquardt

City University of New York (CUNY) – Baruch College

Multiple version iconThere are 3 versions of this paper

Date Written: June 2005

Abstract

This paper examines accounting and non-accounting factors behind accounting losses over a fifty-year period. Using multivariate time-series analysis, we report evidence that the annual percentage of losses for U.S. firms is significantly related to accounting conservatism, Compustat coverage of small firms, real firm performance as measured by cash flows from operations, and business cycle factors. We further find that non-accounting factors tend to play the dominant role in explaining accounting losses over our sample period. Our results are robust to alternative definitions of macroeconomic productivity, as well as to varying model specifications. Our findings contribute to the literature on accounting losses and accounting conservatism and have implications for the use of accounting loss information in numerous settings.

Keywords: Accounting losses, accounting conservatism, business cycle, macreconomics, cash flows from operations

JEL Classification: M41, M44, E30

Suggested Citation

Klein, April and Marquardt, Carol, Fundamentals of Accounting Losses (June 2005). Available at SSRN: https://ssrn.com/abstract=297934 or http://dx.doi.org/10.2139/ssrn.297934

April Klein (Contact Author)

New York University (NYU) - Department of Accounting ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012
United States

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)

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