Market valuation of accrual components

Rick Francis

Review of Accounting and Finance, 2008, vol. 7, issue 2, 150-166

Abstract: Purpose - The purpose of this paper is to generate empirical evidence that facilitates our understanding of the market pricing for cash flows and accruals. Design/methodology/approach - The study is empirical in nature, and utilizes and archival methodology. Findings - The evidence in this study supports the primary hypothesis that the market valuations for the receivable accrual are greater than the valuations for other current accruals. Additionally, the results suggest that market valuations for cash flows are not monotonically greater than the valuations for accruals. Research limitations/implications - Overall, the results of this study suggest that inferences about the market's valuation of cash flows and accruals must consider multiple sources of variation in a concurrent fashion. Practical implications - Models for equity valuation used by financial analysts, institutional investors, etc. should allow the various components of accruals to act independently. Originality/value - This study contributes to the literature by synthesizing various aspects of capital markets research in accounting to enhance our understanding of the role that cash flows and accruals maintain for equity valuation.

Keywords: Cash flow; Market value; Accountancy valuations; Equity capital (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

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:eme:rafpps:v:7:y:2008:i:2:p:150-166

DOI: 10.1108/14757700810874128

Access Statistics for this article

Review of Accounting and Finance is currently edited by Nawazish Mirza

More articles in Review of Accounting and Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().