The accrual anomaly : effects of financial statement presentation format on less-informed investors.
I examine whether investors exhibit greater ability to discriminate between high-accrual and low-accrual firms when they have more knowledge of earnings persistence and when accrual information is presented more clearly in the financial statements. Using an experimental approach, I manipulate in the...
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| Format: | Research Report |
| Language: | English |
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2009
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| Online Access: | http://hdl.handle.net/10356/14727 |
| _version_ | 1826109714773049344 |
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| author | Low, Bernardine Mei Fong. |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Low, Bernardine Mei Fong. |
| author_sort | Low, Bernardine Mei Fong. |
| collection | NTU |
| description | I examine whether investors exhibit greater ability to discriminate between high-accrual and low-accrual firms when they have more knowledge of earnings persistence and when accrual information is presented more clearly in the financial statements. Using an experimental approach, I manipulate in the financial statements the presence, juxtaposition, and placement of accrual line items and an accrual subtotal that sums up the accrual line items. I also manipulate whether the firm's earnings consist of high accruals and low cash flows or low accruals and high cash flows and measure investors' knowledge of earnings persistence. I find that high-knowledge investors better discriminate between high-accrual and low-accrual firms than low-knowledge investors. High-knowledge investors are not affected by the financial statement format of accrual information. Low-knowledge investors discriminate the most when the accrual subtotal is juxtaposed with accrual line items either in the income statement or in the cash flow statement. Low-knowledge investors do not discriminate much when the subtotal is not presented or when it is presented but is not juxtaposed with accrual line items. |
| first_indexed | 2024-10-01T02:22:50Z |
| format | Research Report |
| id | ntu-10356/14727 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T02:22:50Z |
| publishDate | 2009 |
| record_format | dspace |
| spelling | ntu-10356/147272023-05-19T07:31:16Z The accrual anomaly : effects of financial statement presentation format on less-informed investors. Low, Bernardine Mei Fong. Nanyang Business School DRNTU::Business::Accounting::Financial statements and analysis I examine whether investors exhibit greater ability to discriminate between high-accrual and low-accrual firms when they have more knowledge of earnings persistence and when accrual information is presented more clearly in the financial statements. Using an experimental approach, I manipulate in the financial statements the presence, juxtaposition, and placement of accrual line items and an accrual subtotal that sums up the accrual line items. I also manipulate whether the firm's earnings consist of high accruals and low cash flows or low accruals and high cash flows and measure investors' knowledge of earnings persistence. I find that high-knowledge investors better discriminate between high-accrual and low-accrual firms than low-knowledge investors. High-knowledge investors are not affected by the financial statement format of accrual information. Low-knowledge investors discriminate the most when the accrual subtotal is juxtaposed with accrual line items either in the income statement or in the cash flow statement. Low-knowledge investors do not discriminate much when the subtotal is not presented or when it is presented but is not juxtaposed with accrual line items. 2009-01-21T02:00:04Z 2009-01-21T02:00:04Z 2004 2004 Research Report http://hdl.handle.net/10356/14727 en 43 p. application/pdf |
| spellingShingle | DRNTU::Business::Accounting::Financial statements and analysis Low, Bernardine Mei Fong. The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
| title | The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
| title_full | The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
| title_fullStr | The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
| title_full_unstemmed | The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
| title_short | The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
| title_sort | accrual anomaly effects of financial statement presentation format on less informed investors |
| topic | DRNTU::Business::Accounting::Financial statements and analysis |
| url | http://hdl.handle.net/10356/14727 |
| work_keys_str_mv | AT lowbernardinemeifong theaccrualanomalyeffectsoffinancialstatementpresentationformatonlessinformedinvestors AT lowbernardinemeifong accrualanomalyeffectsoffinancialstatementpresentationformatonlessinformedinvestors |