The market pricing of accruals quality
Publication
, Journal Article
Francis, J; LaFond, R; Olsson, P; Schipper, K
Published in: Journal of Accounting and Economics
June 1, 2005
We investigate whether investors price accruals quality, our proxy for the information risk associated with earnings. Measuring accruals quality (AQ) as the standard deviation of residuals from regressions relating current accruals to cash flows, we find that poorer AQ is associated with larger costs of debt and equity. This result is consistent across several alternative specifications of the AQ metric. We also distinguish between accruals quality driven by economic fundamentals (innate AQ) versus management choices (discretionary AQ). Both components have significant cost of capital effects, but innate AQ effects are significantly larger than discretionary AQ effects. © 2005 Elsevier B.V. All rights reserved.
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Published In
Journal of Accounting and Economics
DOI
ISSN
0165-4101
Publication Date
June 1, 2005
Volume
39
Issue
2
Start / End Page
295 / 327
Related Subject Headings
- Accounting
- 3801 Applied economics
- 3502 Banking, finance and investment
- 3501 Accounting, auditing and accountability
- 1502 Banking, Finance and Investment
- 1501 Accounting, Auditing and Accountability
- 1402 Applied Economics
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Francis, J., LaFond, R., Olsson, P., & Schipper, K. (2005). The market pricing of accruals quality. Journal of Accounting and Economics, 39(2), 295–327. https://doi.org/10.1016/j.jacceco.2004.06.003
Francis, J., R. LaFond, P. Olsson, and K. Schipper. “The market pricing of accruals quality.” Journal of Accounting and Economics 39, no. 2 (June 1, 2005): 295–327. https://doi.org/10.1016/j.jacceco.2004.06.003.
Francis J, LaFond R, Olsson P, Schipper K. The market pricing of accruals quality. Journal of Accounting and Economics. 2005 Jun 1;39(2):295–327.
Francis, J., et al. “The market pricing of accruals quality.” Journal of Accounting and Economics, vol. 39, no. 2, June 2005, pp. 295–327. Scopus, doi:10.1016/j.jacceco.2004.06.003.
Francis J, LaFond R, Olsson P, Schipper K. The market pricing of accruals quality. Journal of Accounting and Economics. 2005 Jun 1;39(2):295–327.
Published In
Journal of Accounting and Economics
DOI
ISSN
0165-4101
Publication Date
June 1, 2005
Volume
39
Issue
2
Start / End Page
295 / 327
Related Subject Headings
- Accounting
- 3801 Applied economics
- 3502 Banking, finance and investment
- 3501 Accounting, auditing and accountability
- 1502 Banking, Finance and Investment
- 1501 Accounting, Auditing and Accountability
- 1402 Applied Economics