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Auditor changes and discretionary accruals
Journal of Accounting and Economics, 1998Abstract In a sample of auditor change firms we find that discretionary accruals are income decreasing during the last year with the predecessor auditor and generally insignificant during the first year with the successor. In addition, the income decreasing discretionary accruals are concentrated among firms expected to have greater litigation risk ...
Mark L. DeFond, K.R. Subramanyam
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Discretionary Accounting Accruals, Managers' Incentives and Audit Fees
SSRN Electronic Journal, 2003AbstractThis paper examines the linkages between discretionary accruals (DAs), managerial share ownership, management compensation, and audit fees. It draws on the theory that managers of firms with high management ownership are likely to use DAs to communicate value‐relevant information, while managers of firms with high accounting‐based compensation ...
Ferdinand A. Gul +2 more
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Estimation sample selection for discretionary accruals models
Journal of Accounting and Economics, 2013We examine how the criteria for choosing estimation samples 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.
Frank Ecker +3 more
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The Accounting Review, 2013
ABSTRACT: Despite a large literature on discretionary accruals, how the use of discretionary accruals impacts corporate financial decisions is not well understood. We hypothesize that a financially constrained firm with valuable projects can use discretionary accruals to credibly signal positive prospects, enabling it to raise capital to
Linck, James S. +2 more
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ABSTRACT: Despite a large literature on discretionary accruals, how the use of discretionary accruals impacts corporate financial decisions is not well understood. We hypothesize that a financially constrained firm with valuable projects can use discretionary accruals to credibly signal positive prospects, enabling it to raise capital to
Linck, James S. +2 more
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Earnings and discretionary accruals
Managerial and Decision Economics, 2021Earnings management is a concerning issue for investors and regulators as it reduces the informativeness of financial reporting. Discretionary accruals are acknowledged to be proxies for earnings management. The study is conducted on firms in the US markets from 1975 to 2012, and the quantitative methodology is applied.
Yasmin Jamadar +3 more
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Do advisory directors increase discretionary accruals?
International Journal of Accounting & Information Management, 2023Purpose This study aims to examine whether the presence of advisory directors affects firm discretionary accruals (DACC), a widely used proxy for financial reporting quality. The authors argue that the advisory director weakens the board monitoring role and impairs the firm financial reporting quality by increasing DACC.
Ummya Salma, Md. Borhan Uddin Bhuiyan
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Performance matched discretionary accrual measures
Journal of Accounting and Economics, 2001Prior research shows that extant discretionary accrual models are misspecified when applied to firms with extreme performance. Nonetheless, use of such models in tests of earnings management and market efficiency is commonplace in the literature. We examine the specification and power of the test based on a performance-matched discretionary accrual ...
S.P. Kothari +2 more
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Entropy-Balanced Discretionary Accruals
SSRN Electronic Journal, 2015Extant research in accounting raises issues with the specification and power of discretionary accrual measures. We propose entropy balancing, a recently developed matching technique, as a means to improve the measurement of a normal accrual. Entropy balancing identifies weights for each control sample observation such that the distributions of ...
Jeff L. McMullin, Bryce Schonberger
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Characteristics of Institutional Investors and Discretionary Accruals
SSRN Electronic Journal, 2003PurposeThe purpose of this paper is to examine the differential effects of institutional non‐blockholders (NONB) and active institutional blockholders (ACTB) on earnings management behavior, as measured by discretionary accruals.Design/methodology/approachThis paper also proposes that the hypothesized influence of NONB and ACTB on earnings management ...
C.S. Agnes Cheng, Austin Reitenga
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Corporate cash savings and discretionary accruals
China Finance Review International, 2020PurposeThis paper assesses how discretionary accruals (DAs) affect corporate cash savings policies and the motivation behind this cash saving behavior and, also whether the linkage between DAs and cash saving affect the market-perceived cash value.Design/methodology/approachWe construct the measure of DAs using the previous five-year average ...
Jianjun Jia +3 more
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