Journal article
Discretionary accounting choices and the predictive ability of accruals with respect to future cash flows
Journal of accounting & economics, Vol.53(1-2), pp.330-352
02/01/2012
DOI: 10.1016/j.jacceco.2011.11.003
Abstract
Using a sample of restatement firms and a meet-or-beat model to classify firms as making discretionary accounting choices for opportunistic meet-or-beat (OP-MB) reasons, we show that originally reported earnings and accrual components are less predictive of future cash flows relative to the restated numbers. We find the opposite is true for firms classified as making discretionary accounting choices for non-OP-MB reasons. We consider a number of competing explanations for these latter results. Our findings are most consistent with the informational hypothesis, weakly consistent with conservative-motivated efficient contracting hypotheses, but inconsistent with opportunistic contracting and misapplication/errors of GAAP explanations.
Details
- Title: Subtitle
- Discretionary accounting choices and the predictive ability of accruals with respect to future cash flows
- Creators
- Brad A. Badertscher - University of Notre DameDaniel W. Collins - University of IowaThomas Z. Lys - Northwestern University
- Resource Type
- Journal article
- Publication Details
- Journal of accounting & economics, Vol.53(1-2), pp.330-352
- DOI
- 10.1016/j.jacceco.2011.11.003
- ISSN
- 0165-4101
- eISSN
- 1879-1980
- Publisher
- Elsevier B.V
- Number of pages
- 23
- Language
- English
- Date published
- 02/01/2012
- Academic Unit
- Accounting
- Record Identifier
- 9984963042902771
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