On the Stewardship and Valuation Implications of Accrual Accounting Systems

• 成果类型: Article
• 署名作者: Drymiotes, George; Hemmer, Thomas
• 署名单位: University of Cyprus; Rice University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/joar.12000
• 发表日期: 2013
• 页码: 281-334
• 关键词: VALUE-RELEVANCE; financial reports; earnings; provision; conservatism; incentives; EFFICIENCY

摘要

In this paper we explore the role of accruals in determining earnings quality from both a stewardship and a valuation perspective. We show that the valuation and stewardship qualities of accrual accounting are maximized by either an aggressive or a conservative accrual strategy. Furthermore, accrual strategy choices can be delegated to management as it does not benefit by implementing a strategy that is not in the best interests of the shareholders. We also investigate the implications of accrual strategies for standard empirical measures of earnings quality: regression coefficients and R(2)s from price-earnings and market-to-book regressions. We show that such measures respond differently, and in some cases adversely, to the kind of strategies that make accounting constructs more correlated with the underlying economic activities of firms.