Can the earnings fixation hypothesis explain the accrual anomaly?

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...

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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
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Institution:	Nanyang Technological University
Language:	English

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spelling	sg-ntu-dr.10356-1002772023-05-19T06:44:41Z Can the earnings fixation hypothesis explain the accrual anomaly? Shi, Linna Zhang, Huai Nanyang Business School Business 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 in the responsiveness of the stock price to earnings and the differential persistence of cash flows relative to accruals. Our empirical evidence confirms our prediction and lends support to the earnings fixation hypothesis. Accepted version 2013-12-06T05:26:46Z 2019-12-06T20:19:30Z 2013-12-06T05:26:46Z 2019-12-06T20:19:30Z 2011 2011 Journal Article Shi, L., & Zhang, H. (2012). Can the earnings fixation hypothesis explain the accrual anomaly?. Review of Accounting Studies, 17(1), 1-21. https://hdl.handle.net/10356/100277 http://hdl.handle.net/10220/18137 10.1007/s11142-011-9171-6 en Review of accounting studies © 2011 Springer Science+Business Media, LLC. This is the author created version of a work that has been peer reviewed and accepted for publication by Review of Accounting Studies, Springer Science+Business Media, LLC. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [http://dx.doi.org/10.1007/s11142-011-9171-6]. 32 p. application/pdf
institution	Nanyang Technological University
building	NTU Library
continent	Asia
country	Singapore Singapore
content_provider	NTU Library
collection	DR-NTU
language	English
topic	Business
spellingShingle	Business Shi, Linna Zhang, Huai Can the earnings fixation hypothesis explain the accrual anomaly?
description	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 in the responsiveness of the stock price to earnings and the differential persistence of cash flows relative to accruals. Our empirical evidence confirms our prediction and lends support to the earnings fixation hypothesis.
author2	Nanyang Business School
author_facet	Nanyang Business School Shi, Linna Zhang, Huai
format	Article
author	Shi, Linna Zhang, Huai
author_sort	Shi, Linna
title	Can the earnings fixation hypothesis explain the accrual anomaly?
title_short	Can the earnings fixation hypothesis explain the accrual anomaly?
title_full	Can the earnings fixation hypothesis explain the accrual anomaly?
title_fullStr	Can the earnings fixation hypothesis explain the accrual anomaly?
title_full_unstemmed	Can the earnings fixation hypothesis explain the accrual anomaly?
title_sort	can the earnings fixation hypothesis explain the accrual anomaly?
publishDate	2013
url	https://hdl.handle.net/10356/100277 http://hdl.handle.net/10220/18137
_version_	1770563490124136448

Can the earnings fixation hypothesis explain the accrual anomaly?

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