Does The Accrual Anomaly Exists In Stock Market? Evidence From Pakistan

Muhammad Saad Baloch

MPRA Paper from University Library of Munich, Germany

Abstract: This study examined the existence of accrual anomaly exclusively in Karachi Stock Exchange by measuring accruals from cash flow approach and by using a sample of 100 non-financial firms registered at Karachi Stock Exchange (KSE) for the time period of 2002 to 2013. The objective of the study is to examine the accrual anomaly by measuring accruals from cash flow approach as measuring accruals from balance sheet approach may contain estimation errors which may lead to biased result i.e. existence of accrual anomaly. Robust Fixed Effect method is used to achieve the objective. Result revealed that accruals predict the future stock returns positively when accruals are measured through cash flow approach which is contradictory to the accrual anomaly. It proved that measuring accruals from balance sheet approach contain estimation errors which lead to biased results. The study concluded that accrual anomaly does not exist in KSE and selection of specific estimation method is reason for accrual anomaly.

Keywords: Accrual Anomaly; Accruals; Accounting; Earning Management; KSE; Pakistan (search for similar items in EconPapers)
JEL-codes: M41 M49 (search for similar items in EconPapers)
Date: 2015-09-30
New Economics Papers: this item is included in nep-acc and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in EUROPEAN JOURNAL OF ACCOUNTING, FINANCE & BUSINESS 3.3(2015): pp. 44-71

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/67618/1/MPRA_paper_67618.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:67618

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().