We examine how the criteria for choosing estimation samples (peer firms) affect the ability to detect discretionary accruals, using several variants of the Jones (1991) model. Researchers commonly estimate accruals models in cross-section, and define the estimation sample as all firms in the same industry. We examine whether firm size performs at least as well as industry membership as the crit...

This study documents a subtle and counter-intuitive interaction between operating cash flow (CFO) and accruals, and their association with future stock returns. While the two strategies should by construction capture similar anomalies, we find evidence in two large stock markets that they appear distinct, and that returns to these strategies are strongly negatively correlated. We show that the ...

This study explores the relationship between company earnings management and relative value relevance of book earnings. The differential effect on (EM) from 2014 to 2018 for all firms listed Saudi Stock Exchange (Tadawul) is investigated by short-term versus long-term discretionary accruals. For whose EM considered as an indication its accruals, it anticipated that earnings’ would be lower than...

This study examines the role of pre-IPO discretionary accruals in the valuation and underpricing of IPOs. We find that IPO offer price is unaffected whereas market closing price is positively associated with the levels of pre-IPO discretionary accruals for issuers with aggressively reported earnings. We also find that this relative over-valuation of managed earnings by the markets explains a po...

The purpose of this research is to determine the impact quality environmental disclosure, corporate governance, and assimetric information on discretionary accruals. In study, population mining companies that implement PROPER are listed Indonesia Stock Exchange between 2016 2020. Purposive sampling was used obtain data from 47 different companies. Multiple linear regression analysis performed a...

this paper investigates the relationship between earnings management and quality of earnings for the bankrupt and non-bankrupt firms listed in the tehran stock exchange from 2007 to 2012.the earnings quality  is measured by four separate accounting-based earnings attributes: accruals quality, earnings persistence, earnings predictability; earnings and is also examined by testing the relationshi...

This paper evaluates a comprehensive list of metrics proposed for detecting earnings management in a setting where managers manipulate earnings to round up reported EPS. I find that deferred tax expense is able to detect earnings management in the rounding-up setting while discretionary accruals models are not. Further analysis provides evidence that firms manipulate bad debt expense for the pu...

This paper examines whether the firm-level accrual and cash flow effects extend to the aggregate stock market. In sharp contrast to previous firm-level findings, aggregate accruals is a strong positive time series predictor of aggregate stock returns, and cash flows is a negative predictor. In addition, innovations in accruals are negatively contemporaneously correlated with aggregate returns, ...