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The Ebbing of Accrual Accounting
Date de parution
2017
Résumé
This paper investigates the accruals ability to improve the information content of earnings over cash flows, as reflected in market prices. We find that, when the correlation between accruals and cash flows is less negative than -0.4, the association of the two performance measures to prices is statistically indistinguishable. This finding, together with the documented decrease over time in the magnitude of the negative correlation between the earnings components (Bushman et al. 2016), implies a sharp reduction of the pertinence of accruals to valuation. The proportion of firms in the sample whose pricing significantly benefits from accrual accounting (with respect to cash flow accounting) decreased from around 95% in the beginning of the 70s' to roughly 65% in 2015.
Autre version
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3072287
Type de publication
Resource Types::text::working paper
