What Determines the Variability of Accounting Accruals?
36 Pages
Posted: 10 Mar 2003
Chinese University of Hong Kong - School of Accountancy
Tulane University - A.B. Freeman School of Business; Tsinghua University - School of Economics & Management
Claremont McKenna College - Robert Day School of Economics and Finance
Date Written: October 2004
Abstract
The variability of accounting accruals provides a measure of the normal level of managers' accounting discretion and has important implications for event studies of earnings management. We examine how this measure is related to the economic factors including both firm characteristics and attributes of the disclosure environment. We show that the variability of accruals is related to firm size, leverage, variability of cash flows, operating cycle, growth, and other factors. Significant industry differences and temporal patterns are also found.
Keywords: Variability of Accruals, Accounting Discretion, Earnings Management
JEL Classification: M41, M43, C21
Suggested Citation:
Suggested Citation
Gu, Zhaoyang and Lee, Chi-Wen Jevons and Rosett, Joshua G., What Determines the Variability of Accounting Accruals? (October 2004). Available at SSRN: https://ssrn.com/abstract=375661 or http://dx.doi.org/10.2139/ssrn.375661
