A large body of accounting research in the past has documented the existence of conservatism and timeliness of income recognition as distinct factors which affect the returns-earnings relation. However, earnings are not the only measure of financial performance that is affected by conservatism. The aim of this paper is to examine the impact of conservatism on accrual measures and drivers, in th...

We investigate how managerial ability affects the intentional distortion of financial statements (earnings management). On the one hand, better managers receive a compensation premium for their perceived ability, and to the extent that earnings management would tarnish their reputations, we expect them to manage earnings less. On the other hand, better managers may be more able to extract rents...

This paper develops a measure of income tax expense accrual quality. Following the framework of Dechow and Dichev (2002), we examine the extent to which the financial statement accrual for book tax expense maps into tax-related cash flows. We argue that the quality of a firm’s tax accrual is decreasing in the magnitude of estimation error associated with the accrual, and that tax accrual qualit...

This paper theoretically and empirically investigates the role of CEO career concerns on accruals based and real activities earnings management. We develop a model of earnings management, rooted in career concerns, that alternatively incorporates the features of the accrual accounting performance measurement system and the negative value-destroying effects of real activities earnings management...