Research Design Issues in Studies Using Discretionary Accruals

32 Pages Posted: 7 May 2018

Multiple version iconThere are 2 versions of this paper

Date Written: April 16, 2018


Because discretionary accruals are known to be noisy proxies of earnings management that often produce biased results, we argue that a correlation between discretionary accruals and a hypothesized factor is generally not an adequate basis for valid inferences about earnings management. In this commentary, we propose and discuss a set of suggestions for improving the research design of studies on earnings management that use discretionary accruals. Specifically, we discuss suggestions for developing predictions about earnings management, choosing among discretionary accrual proxies, estimating discretionary accruals, addressing potential bias in the estimates, and critically evaluating the results obtained.

Keywords: discretionary accruals, earnings management, research design

JEL Classification: M41

Suggested Citation

McNichols, Maureen F. and Stubben, Stephen, Research Design Issues in Studies Using Discretionary Accruals (April 16, 2018). Available at SSRN: or

Maureen F. McNichols

Stanford University ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-0833 (Phone)

Stephen Stubben (Contact Author)

University of Utah ( email )

1655 E. Campus Center
Salt Lake City, UT 84112
United States

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