Errors in Estimating Accruals: Implications for Empirical Research

  title={Errors in Estimating Accruals: Implications for Empirical Research},
  author={D. Collins and P. Hribar},
  journal={Social Science Research Network},
  • D. Collins, P. Hribar
  • Published 1999
  • Economics
  • Social Science Research Network
  • This paper examines the impact of measuring accruals as the change in successive balance sheet accounts, as opposed to measuring accruals directly from the statement of cash flows. Our primary finding is that studies using a balance sheet approach to test for earnings management are potentially contaminated by measurement error in accruals estimates. In particular, if the partitioning variable used to indicate the presence of earnings management is correlated with the occurrence of mergers and… CONTINUE READING
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