Journal article
The Mispricing of Cash Flows and Accruals at Different Life-Cycle Stages
Contemporary accounting research, Vol.32(3), pp.1053-1072
09/01/2015
DOI: 10.1111/1911-3846.12117
Abstract
This paper employs the firm life-cycle concept to extend our understanding of the mispricing of accrual and cash flow information by the stock market. We find that accruals and free cash flows are strongly (negatively) correlated in the maturity and decline stages of a firm's life cycle but not in the growth stage, suggesting that they capture unique information in the growth stage of the firm's life cycle but more correlated information in the later stages. Consistent with this finding, we show that the cash flows anomaly subsumes the accruals anomaly in maturity and decline stages, but not in the growth stage. Our findings contribute to the debate regarding the overlap between the two anomalies.
Details
- Title: Subtitle
- The Mispricing of Cash Flows and Accruals at Different Life-Cycle Stages
- Creators
- Paul Hribar - University of IowaNir Yehuda - The University of Texas at Dallas
- Resource Type
- Journal article
- Publication Details
- Contemporary accounting research, Vol.32(3), pp.1053-1072
- Publisher
- Wiley
- DOI
- 10.1111/1911-3846.12117
- ISSN
- 0823-9150
- eISSN
- 1911-3846
- Number of pages
- 20
- Language
- English
- Date published
- 09/01/2015
- Academic Unit
- Accounting
- Record Identifier
- 9984380539902771
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