File Download

There are no files associated with this item.

  Links for fulltext
     (May Require Subscription)
Supplementary

Article: The Reversal of Abnormal Accruals and the Market Valuation of Earnings Surprises

TitleThe Reversal of Abnormal Accruals and the Market Valuation of Earnings Surprises
Authors
KeywordsAbnormal Accruals
Accruals
Earnings Response Coefficient
Earnings Surprise
Issue Date2001
PublisherAmerican Accounting Association. The Journal's web site is located at http://aaapubs.aip.org/accr/
Citation
Accounting Review, 2001, v. 76 n. 3, p. 375-404 How to Cite?
AbstractIf the market anticipates the reversing nature of abnormal working capital accruals, then the reported magnitude of earnings surprises that contain abnormal accruals will differ from the underlying magnitude that is priced by the market. We expect the market's perception of this difference to affect the ERCs associated with earnings surprises that contain abnormal accruals. We test our predictions using an abnormal accruals measure that captures the difference between reported working capital and a proxy for the market's expectations of the level of working capital required to support current sales levels. Consistent with our hypotheses, we find higher ERCs when abnormal accruals suppress the magnitude of earnings surprises, and lower ERCs when abnormal accruals exaggerate the magnitude of earnings surprises. We also find results consistent with analysts predictably considering the reversing implications of abnormal accruals in revising future earnings forecasts. These findings are consistent with market participants anticipating the reversing implications of abnormal accruals. However, analysis of subsequent stock returns provides evidence that market participants do not fully impound the pricing implications of abnormal accruals at the earnings announcement date.
Persistent Identifierhttp://hdl.handle.net/10722/177889
ISSN
2015 Impact Factor: 1.953
2015 SCImago Journal Rankings: 4.478
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorDefond, MLen_US
dc.contributor.authorPark, CWen_US
dc.date.accessioned2012-12-19T09:40:42Z-
dc.date.available2012-12-19T09:40:42Z-
dc.date.issued2001en_US
dc.identifier.citationAccounting Review, 2001, v. 76 n. 3, p. 375-404en_US
dc.identifier.issn0001-4826en_US
dc.identifier.urihttp://hdl.handle.net/10722/177889-
dc.description.abstractIf the market anticipates the reversing nature of abnormal working capital accruals, then the reported magnitude of earnings surprises that contain abnormal accruals will differ from the underlying magnitude that is priced by the market. We expect the market's perception of this difference to affect the ERCs associated with earnings surprises that contain abnormal accruals. We test our predictions using an abnormal accruals measure that captures the difference between reported working capital and a proxy for the market's expectations of the level of working capital required to support current sales levels. Consistent with our hypotheses, we find higher ERCs when abnormal accruals suppress the magnitude of earnings surprises, and lower ERCs when abnormal accruals exaggerate the magnitude of earnings surprises. We also find results consistent with analysts predictably considering the reversing implications of abnormal accruals in revising future earnings forecasts. These findings are consistent with market participants anticipating the reversing implications of abnormal accruals. However, analysis of subsequent stock returns provides evidence that market participants do not fully impound the pricing implications of abnormal accruals at the earnings announcement date.en_US
dc.languageengen_US
dc.publisherAmerican Accounting Association. The Journal's web site is located at http://aaapubs.aip.org/accr/en_US
dc.relation.ispartofAccounting Reviewen_US
dc.subjectAbnormal Accrualsen_US
dc.subjectAccrualsen_US
dc.subjectEarnings Response Coefficienten_US
dc.subjectEarnings Surpriseen_US
dc.titleThe Reversal of Abnormal Accruals and the Market Valuation of Earnings Surprisesen_US
dc.typeArticleen_US
dc.identifier.emailPark, CW: acparkc@hku.hken_US
dc.identifier.authorityPark, CW=rp01090en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.2308/accr.2001.76.3.375-
dc.identifier.scopuseid_2-s2.0-0035595263en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0035595263&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume76en_US
dc.identifier.issue3en_US
dc.identifier.spage375en_US
dc.identifier.epage404en_US
dc.identifier.isiWOS:000170013600005-
dc.publisher.placeUnited Statesen_US
dc.identifier.scopusauthoridDeFond, ML=6602107693en_US
dc.identifier.scopusauthoridPark, CW=37062708100en_US

Export via OAI-PMH Interface in XML Formats


OR


Export to Other Non-XML Formats