A Market-Based Evaluation of Discretionary-Accrual Models

W. Guay, S.P. Kothari and Ross Watts ()

Working Papers from Rochester, Business - Financial Research and Policy Studies

Abstract: Considerable research in accounting focuses on the role of accruals in capital market valuation and in contracting. The research shows accruals enable managers to improve on cash flows as a mesure of firm performance. However, since accruals provide managers with a means of managing reportedearnings, previous research also documents evidence of opportunistic accrual management. Opportunistic accruals are estimated using discretionary-accrual models that seek to separate earnings into discretionary accruals and nondiscretionary earnings.

Keywords: CAPITAL MARKET; CONTRACTS; ACCOUNTING; MANAGERS (search for similar items in EconPapers)
JEL-codes: G10 G13 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1996
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Citations: View citations in EconPapers (163)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:robufr:96-01

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