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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sg-ntu-dr.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 |
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DRNTU::Business::Accounting::Financial statements and analysis Low, Bernardine Mei Fong. The accrual anomaly : effects of financial statement presentation format on less-informed investors. |
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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. |
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Nanyang Business School |
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Nanyang Business School Low, Bernardine Mei Fong. |
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Research Report |
author |
Low, Bernardine Mei Fong. |
author_sort |
Low, Bernardine Mei Fong. |
title |
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_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_sort |
accrual anomaly : effects of financial statement presentation format on less-informed investors. |
publishDate |
2009 |
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http://hdl.handle.net/10356/14727 |
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1772825146415906816 |