The Role of Accruals in Asymmetrically Timely Gain and Loss Recognition

@article{Ball2005TheRO,
  title={The Role of Accruals in Asymmetrically Timely Gain and Loss Recognition},
  author={R. Ball and L. Shivakumar},
  journal={Financial Accounting},
  year={2005}
}
We investigate the role of accrual accounting in the asymmetrically timely recognition (incorporation in reported earnings) of gains and losses. Timely recognition requires accruals when it precedes complete realization of the gains and losses in cash. We show that nonlinear accruals models incorporating the asymmetry in gain and loss recognition (timelier loss recognition, or conditional conservatism) offer a substantial specification improvement, explaining substantially more variation in… Expand
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