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The Effect of Accrual Heterogeneity on Accrual Quality Inferences.
- Source :
- Accounting Review; Sep2022, Vol. 97 Issue 5, p245-273, 29p, 13 Charts, 4 Graphs
- Publication Year :
- 2022
-
Abstract
- We investigate the impact of the mixed attribute GAAP measurement model on accrual quality inferences. GAAP rules vary from an income statement "matching" focus to a balance sheet "fair-value" focus. Accrual properties are also affected by the business activity being measured and the activity's recurrence. Furthermore, accrual measurement is affected by managerial estimation error/manipulation. As a consequence, accruals are heterogeneous with predictably different statistical properties. We construct a dataset of more than 100,000 accrual items that Compustat aggregates into data item FOPO. We classify these accruals into 32 types over a 21-year span. We show that variation in persistence for the 32 accrual types is consistent with our predictions concerning GAAP rules. We provide a model of accruals and show that it is implausible for estimation error of reasonable magnitudes to explain this variation. Finally, we develop a measure of reporting consistency and show its impact on accrual quality inferences. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 00014826
- Volume :
- 97
- Issue :
- 5
- Database :
- Complementary Index
- Journal :
- Accounting Review
- Publication Type :
- Academic Journal
- Accession number :
- 159261754
- Full Text :
- https://doi.org/10.2308/TAR-2019-0200