The Accrual Anomaly: International Evidence

41 Pages Posted: 18 Apr 2003

See all articles by Morton Pincus

Morton Pincus

University of California, Irvine

Shivaram Rajgopal

Columbia Business School

Mohan Venkatachalam

Duke University - Fuqua School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 2005


We consider stock markets in 20 countries to investigate whether the accruals anomaly (Sloan 1996), characterized by U.S. stock prices overweighting the role of accrual persistence, is a local manifestation of a global phenomenon. In addition, we structure our analysis to determine if the occurrence of the accrual anomaly is related to differences in institutional or accounting structures across the countries. We consider a country's legal tradition, institutional and accounting characteristics linked to earnings management, and capital market characteristics. We find that stock prices overweight accruals in four of the 20 countries we consider: Australia, Canada, the U.K., and the U.S. Results from our multivariate analysis indicate the accrual anomaly is more likely to occur in countries where extensive use of accrual accounting is permitted, the strength of shareholder protection is lower, concentration of share ownership is low, and the legal tradition derives from common law.

JEL Classification: M41, G14, M43, M47

Suggested Citation

Pincus, Morton P.K. and Rajgopal, Shivaram and Venkatachalam, Mohan, The Accrual Anomaly: International Evidence (January 2005). Available at SSRN: or

Morton P.K. Pincus

University of California, Irvine ( email )

Paul Merage School of Business
Irvine, CA 92697-3125
United States
949-824-4062 (Phone)
949-725-2812 (Fax)

Shivaram Rajgopal (Contact Author)

Columbia Business School ( email )

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New York, NY 10027
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Mohan Venkatachalam

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7859 (Phone)
919-660-7971 (Fax)

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