The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors
作者： Ilia D. Dichev , Patricia M. Dechow
DOI: 10.2139/SSRN.277231
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摘要: This paper suggests a new measure of one aspect of the quality of working capital accruals and earnings. One role of accruals is to shift or adjust the recognition of cash flows over time so that the adjusted numbers (earnings) better measure firm performance. However, accruals require assumptions and estimates of future cash flows. We argue that the quality of accruals and earnings is decreasing in the magnitude of estimation error in accruals. We derive an empirical measure of accrual quality as the residuals from firm‐specific …
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