CONSERVATISM, ACCRUAL PERSISTENCE ASYMMETRY, AND STOCK RETURNS

Gulraze Wakil ； Pervaiz Alam

《Advances in Quantitative Analysis of Finance and Accounting》 13期 (2015/12) Pp. 165-199

https://doi.org/10.6293/AQAFA.2015.13.07

並列摘要

This paper investigates accounting conservatism’s effects on accrual persistence and accrual-related future stock returns. We find conservatism significantly increases accrual persistence and accrual-related future stock returns and more so in high accrual firms. We attribute this to conservatism’s reliability and verifiability requirements. However, the effect is statistically insignificant using only low accrual firms. Therefore, conservatism’s effects on accruals depend on their magnitude, i.e., asymmetrically. Moreover, increases in persistence and stock returns related to conservatism in high accrual firms also exists in recent years during which prior literature has shown the accruals anomaly to have diminished to insignificant levels. Our paper will be of interest to investors because markets do not fully capture how accounting conservatism affects accruals and also to auditors, lenders, and standard setters since collectively our paper finds accounting conservatism to be a positive trait for financial reporting.

並列關鍵字

Conservatism ； Accruals Anomaly ； Market Inefficiency ； Persistence Asymmetry

參考文獻

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