Discretionary Accrual Models and the Accounting Process

Xavier Garza-Gomez, Masashi Okumura and Michiko Kunimura
Additional contact information
Xavier Garza-Gomez: Nagoya City University
Masashi Okumura: Nagoya City University
Michiko Kunimura: Nagoya City University

Kobe Economic & Business Review, 2001, vol. 45, 103-135

Abstract: This paper introduces a discretionary accrual model based on the accounting process developed by Dechow, Kothari and Watts (1998). Our model tries to prevent a big proportion of nondiscretionary accruals from being judged as discretionary. Using data from the Japanese stock market, we find that our model fits accruals much better than versions based on Jones (1991). Evidence in this paper shows that our model may modify the findings of previous research in two areas: 1) studies that use the versions of Jones model to detect earnings management and 2) studies that analyze the relation between discretionary accruals and future performance or the relation between discretionary accruals and stock returns.

Keywords: Cash flows; Accounting process; discretionary; Earnings management; Managerial discretion (search for similar items in EconPapers)
JEL-codes: M40 (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.rieb.kobe-u.ac.jp/research/publication/kobe_review/index.html (text/html)

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:kob:review:feb2001::v:45:p:103-135

Access Statistics for this article

Kobe Economic & Business Review is currently edited by Takashi Kamihigashi

More articles in Kobe Economic & Business Review from Research Institute for Economics & Business Administration, Kobe University Contact information at EDIRC.
Bibliographic data for series maintained by Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University ().