The role of industry classification in estimating discretionary accruals

摘要: This study compares the properties of Global Industry Classification Standard (GICS) with three alternatives: Industrial Classification, North American System, and Fama–French classification. First, we demonstrate that GICS results in more reliable industry groupings for financial analysis research; particular, find estimations performance-adjusted discretionary accruals (PADA) based on significantly outperform estimates derived using each alternative classifications systems capturing accruals. Second, show difference between other can provide different results, hence inferences, empirical studies rely Specifically, revisit findings by Teoh et al. (J Financ 53[6]:1935–1970, 1998a) assess conclusion initial public offering (IPO) issuers high abnormal during IPO year experience subsequent poorer long-term stock performance than low do. We this result disappears when PADA are GICS. Our call serious consideration research, either primary or as a necessary corroboration.