The Reversal of Abnormal Accruals and the Market Valuation of Earnings Surprises

Accounting Review

Volumn 76, Issue 3, 2001, Pages 375-404

  DeFond, Mark L ^a   Park, Chul W ^a  

^a NONE

Author keywords

Abnormal accruals; Accruals; Earnings response coefficient; Earnings surprise

Indexed keywords

EID: 0035595263     PISSN: 00014826     EISSN: None     Source Type: Journal    
DOI: 10.2308/accr.2001.76.3.375     Document Type: Article

References (43)

1. Abarbanell, J. and B. Bushee. 1997. Fundamental analysis, future earnings, and stock prices. Journal of Accounting Research 35 (Spring): 1-24.
2. _, and _. 1998. Abnormal returns to a fundamental analysis strategy. The Accounting Review 73 (January): 19-45.
3. Ball, R. and P. Brown. 1968. An empirical evaluation of accounting income numbers. Journal of Accounting Research 6 (Autumn): 159-178.
4. _, and S. P. Kothari. 1991. Security returns around earnings announcements. The Accounting Review 66 (October): 718-738.
5. _, _, and R. L. Watts. 1993. Economic determinants of the relation between earnings changes and stock returns. The Accounting Review 68 (July): 622-638.
6. Basu, S. 1997. The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics 24 (December): 3-38.
7. Beaver, W. 1998. Financial reporting: an accounting revolution. 3rd edition. Upper Saddle River, NJ: Prentice Hall.
8. Belsley, D. A., E. Kuh, and R. E. Welsch. 1980. Regression diagnostics. New York, NY: John Wiley & Sons, Inc.
9. Bernard, V. 1987. Cross-sectional dependence and problems in inference in market-based accounting research. Journal of Accounting Research 25 (Spring): 1-48.
10. _, and J. Thomas. 1989. Post earnings announcement drift: Delayed price response or risk premium? Journal of Accounting Research 27 (Supplement): 1-36.
11. _, and _. 1990. Evidence that stock prices do not fully reflect the implications of current earnings for future earnings. Journal of Accounting and Economics 13 (December): 305-340.
12. _, _, and J. Wahlen. 1997. Accounting-based stock price anomalies: Separating market inefficiencies from risk. Contemporary Accounting Research 14 (Summer): 89-136.
13. Bernstein, L., and J. Wild. 1999. Financial statement analysis. 5th edition. New York, NY: McGraw-Hill.
14. Bowen, R., D. Burgstahler, and L. Daley. 1987. The incremental information content of accrual versus cash flows. The Accounting Review 62 (October): 723-747.
15. Bradshaw, M. T., S. A. Richardson, and R. G. Sloan. 1999. Earnings quality and financial reporting credibility: An empirical investigation. Working paper, University of Michigan.
16. Collins, D., and S. P. Kothari. 1989. An analysis of intertemporal and cross-sectional determinants of earnings response coefficients. Journal of Accounting and Economics 11 (July): 143-181.
17. _, and P. Hribar. 1999. Errors in estimating accruals: Implications for empirical research. Working paper, University of Iowa.
18. _, and _. 2000. Earning-based and accrual-based market anomalies: One effect or two? Journal of Accounting and Economics 29 (February): 101-123.
19. Dechow, P. 1994. Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics 18 (July): 3-42.
20. _, R. Sloan, and A. Sweeney. 1995. Detecting earnings management. The Accounting Review 70 (April): 193-225.
21. _, Kothari, S. P., and R. Watts. 1998. The relation between earnings and cash flows. Journal of Accounting and Economics 25 (May): 133-168.
22. DeFond, M. L., and J. Jiambalvo. 1994. Debt covenant violation and manipulation of accruals. Journal of Accounting & Economics 17 (January): 145-176.
23. Easton, P., and M. Zmjewski. 1989. Cross-sectional variation in the stock market response to accounting earnings announcements. Journal of Accounting and Economics 11 (July): 117-141.
24. Fama, E. R., and J. D. MacBeth. 1973. Risk, return and equilibrium: Empirical tests. The Journal of Political Economy 71 (May/June): 607-636.
25. _, and K. R. French. 1992. The cross-section of expected stock returns. The Journal of Finance 41 (June): 427-465.
26. Foster, G., C. Olsen, and T. Shevlin. 1984. Earnings releases, anomalies and the behavior of security returns. The Accounting Review 59 (October): 574-603.
27. Frankel, R., M. Johnson, and D. Skinner. 1999. An empirical examination of conference calls as a voluntary disclosure medium. Journal of Accounting Research 37 (Spring): 133-150.
28. Freeman, R., and S. Tse. 1989. The multi-period information content of earnings announcements: Confirmations and contradictions of previous earnings reports. Journal of Accounting Research 27 (Supplement): 49-79.
29. _, and _. 1992. A nonlinear model of security price responses to abnormal earnings. Journal of Accounting Research 30 (Autumn): 185-209.
30. Han, J., and S. Wang. 1998. Political costs and earnings management of oil companies during the 1990 Persian Gulf crisis. The Accounting Review 73 (January): 103-118.
31. Hand, J. 1990. A test of the extended functional fixation hypothesis. The Accounting Review 65 (October): 740-763.
32. Hayn, C. 1995. The information content of losses. Journal of Accounting and Economics 20 (September): 125-154.
33. Healy, P. 1996. Discussion of a market-based evaluation of discretionary accruals models. Journal of Accounting Research 34 (Supplement): 107-115.
34. _, and J. Wahlen. 1999. A review of the earnings management literature and its implications for standard setting. Accounting Horizons 13 (December): 365-383.
35. Jones, J. 1991. Earnings management during import relief investigations. Journal of Accounting Research 29 (Autumn): 193-228.
36. Kormendi, R., and R. Lipe. 1987. Earnings innovations, earnings persistence and stock returns. Journal of Business 60 (July): 323-345.
37. Lev, B., and R. Thiagarajan. 1993. Fundamental information analysis. Journal of Accounting Research 31 (Autumn): 190-215.
38. Ohlson, J. A. 1995. Earnings, book values, and dividends in equity valuation. Contemporary Accounting Research 11 (Spring): 661-687.
39. Philbrick, D. R., and W. E. Ricks. 1991. Using Value Line and IBES analyst forecasts in accounting research. Journal of Accounting Research 29 (Autumn): 397-417.
40. Sloan, R. G. 1996. Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review 71 (July): 289-316.
41. Subramanyam, K. R. 1996. The pricing of discretionary accruals. Journal of Accounting and Economics 22 (August-December): 249-282.
42. Watts, R. L., and J. L. Zimmerman. 1986. Positive Accounting Theory. Englewood Cliffs, NJ: Prentice Hall.
43. Xie, H. 2001. The mispricing of abnormal accruals. The Accounting Review 76 (July): 357-373.