Unequal Impact of Conservatism on Accrual Measures and Drivers: Implications for the Specification of Accrual Models

José António Moreira () and Peter F. Pope ()
Additional contact information
José António Moreira: CETE, Faculdade de Economia, Universidade do Porto
Peter F. Pope: ICRA, Management School, Lancaster University

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This study makes two main contributions to the literature. Firstly, it tests empirically the relative timeliness of accrual measures and earnings components used as explanatory variables in accrual models (“accrual drivers”) regarding the impact of conservatism. Secondly, taking into account the empirical evidence on such a timeliness, it discusses intuitively potential implications for the specification of (traditional) accrual models and the quality of discretionary accrual estimates. It concludes that common accrual models, as Jones (1991), are misspecified. They have a dependent variable (accruals) asymmetrically affected by conservatism, and one or more explanatory variables that are not affected, inducing a non-systematic measurement error in estimating discretionary accruals.

Keywords: accruals; accrual models; discretionary accruals; conservatism. (search for similar items in EconPapers)
JEL-codes: C21 M41 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2006-05
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.fep.up.pt/investigacao/cete/papers/dp0604.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.fep.up.pt/investigacao/cete/papers/dp0604.pdf [302 Found]--> https://fep.up.pt/investigacao/cete/papers/dp0604.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:por:cetedp:0604

Access Statistics for this paper

More papers in CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto Contact information at EDIRC.
Bibliographic data for series maintained by Ana Bonanca ().