The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors

By Patricia M. Dechow, Ilia D. Dichev. 2002

5,419 citations recorded by the source corpus.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/d8ae59ed5860d7026d2ef0fe350616924e099f78

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Christian Leuz
2. Jeong‐Bon Kim
3. Martin Walker
4. Peter D. Wysocki
5. Shivaram Rajgopal
6. Terry Shevlin
7. Rodrigo S. Verdi
8. Liandong Zhang

In Strategy and Management

1. Christian Leuz
2. Martin Walker
3. Jeong‐Bon Kim
4. Peter D. Wysocki
5. Shivaram Rajgopal
6. Rodrigo S. Verdi
7. Terry Shevlin
8. Nemit Shroff

Citations in the corpus

• The Effect of Mandatory Adoption of IFRS on Earnings Quality: Evidence from the European Union (2012, background): “(2005) argue that uncertainty in accruals is best captured by the modified Dechow and Dichev (2002) model (hereafter, DD).”
• Cost of Capital and Earnings Transparency (2008, neutral): “…asymmetry: bid-ask spread (Brennan and Subrahmanyam, 1996), arbitrage risk (Mendenhall, 2004), and accrual quality and two measures related to accrual quality, the standard deviation of operating cash flows and the proportion of loss years in the prior ten years (Dechow and Dichev, 2002).”
• Internal Control Weaknesses and Financial Reporting Fraud (2017, methodology): “We thus control for ACCRUAL_QUALITY, the standard deviation of the residuals from Dechow and Dichev (2002), as implemented by Doyle et al. (2007a), for years t-4 to t. Column (3) of Table 9 reveals that our results are robust to controlling for accrual quality.”
• Earnings management or forecast guidance to meet analyst expectations? (2009, neutral): “First, research shows that working capital accruals account for most of the variation in total accruals (Sloan, 1996; Subramanyam, 1996; Thomas and Zhang, 2000; Dechow and Dichev, 2002).”
• A Returns‐Based Representation of Earnings Quality (2006, methodology): “AQ and AQFactor Mimicking Portfolios Our main tests use Dechow and Dichev’s (2002) accruals quality metric to capture earnings quality. This choice is based on Francis et al.’s (2004) finding that accruals quality has a stronger association with the cost of equity than other earnings attributes.”
• Earnings quality: Evidence from the field (2013, methodology): “This link between accrual and cash numbers has certainly been recognized in practitioner circles (e.g., O’Glove 1998) and on the academic side as well (e.g., Dechow and Dichev 2002).”
• Financial Statement Comparability and Expected Crash Risk (2016, neutral): “, 1995), the standard deviation of firm-level residuals from the Dechow and Dichev (2002) model during the past five years, the conservatism measure based on Khan and Watts (2009), and the likelihood of accounting restatements developed by Dechow et al.”
• Earnings management and market liquidity (2012, methodology): “Bhattacharya et al. use a modified version of Dechow and Dichev (2002) as their measure of earnings quality.”
• Board Independence, CEO Duality and Accrual Management: Malaysian Evidence (2008, methodology): “In order to be effective the corporate board must include outside members who can act as arbitrators during disagreements among internal managers (Fama and Jensen, 1983). Normally, the corporate board comprises senior managers from within the company to take advantage of their management expertise. ”