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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Main Author: Low, Bernardine Mei Fong.
Other Authors: Nanyang Business School
Format: Research Report
Language:English
Published: 2009
Subjects:
Online Access:http://hdl.handle.net/10356/14727
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Institution: Nanyang Technological University
Language: English
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spelling 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
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic DRNTU::Business::Accounting::Financial statements and analysis
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.
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.
author2 Nanyang Business School
author_facet Nanyang Business School
Low, Bernardine Mei Fong.
format 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
url http://hdl.handle.net/10356/14727
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