Can the earnings fixation hypothesis explain the accrual anomaly?

• Main Authors: Shi, Linna, Zhang, Huai
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2013
• Subjects: Business
• Online Access: https://hdl.handle.net/10356/100277; http://hdl.handle.net/10220/18137
• Institution: Nanyang Technological University

This paper provides empirical evidence on whether the earnings fixation hypothesis can explain the accrual anomaly originally documented in Sloan (1996). Our analytical model yields the prediction that if investors fixate on reported earnings, the effectiveness of the accrual strategy will increase...