Accrual reliability, earnings persistence and stock prices

• 成果类型: Article
• 署名作者: Richardson, SA; Sloan, RG; Soliman, MT; Tuna, I
• 署名单位: University of Michigan System; University of Michigan; Stanford University; University of Pennsylvania
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2005.04.005
• 发表日期: 2005
• 关键词: Cash flows; FUTURE PROFITABILITY; VALUE-RELEVANCE; errors

摘要

This paper extends the work of Sloan (1996. The Accounting Review 71, 289) by linking accrual reliability to earnings persistence. We construct a model showing that less reliable accruals lead to lower earnings persistence. We then develop a comprehensive balance sheet categorization of accruals and rate each category according to the reliability of the underlying accruals. Empirical tests generally confirm that less reliable accruals lead to lower earnings persistence and that investors do not fully anticipate the lower earnings persistence, leading to significant security mispricing. These results suggest that there are significant costs associated with incorporating less reliable accrual information in financial statements. (c) 2005 Elsevier B.V. All rights reserved.