Evaluating the ‘ accrual-fixation ’ hypothesis as an explanation for the accrual anomaly

@inproceedings{Zach2007EvaluatingT,
  title={Evaluating the ‘ accrual-fixation ’ hypothesis as an explanation for the accrual anomaly},
  author={Tzachi Zach},
  year={2007}
}
  • Tzachi Zach
  • Published 2007
In this study, I directly examine whether the accrual-fixation hypothesis explains the accrual anomaly, first documented in Sloan (1996). The accrual-fixation hypothesis posits that investors fixate on earnings without taking into account accruals’ tendency to reverse. Thus, the returns to an accrual-based strategy are related to accruals’ reversals. I use the reversal property of the accrual-fixation hypothesis to generate testable empirical predictions. I find that extreme accrual firms are… CONTINUE READING

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