Jurnal Umum
Discretionary Accruals and the Emergence of Profitability
This study examines discretionary accruals associated with firms’ reaching
profitability after a series of quarterly losses. As firms approach
profitability, we posit they will be characterized with less income
increasing discretion given the reversing nature of accruals. We find
results consistent with this expectation. The discretionary accrual behavior
for firms that remain profitable contrasts to that of a control sample
that does not remain profitable. In the quarters preceding a reported
profit, firms that sustain profitability use significantly lower income
increasing discretionary accruals. For these firms, we also find that past
discretion relates inversely to future profitability. We interpret our
results as evidence that discretionary accruals for persistent loss firms
can serve as a leading indicator of the ability to sustain future profits.
J3621112011 | Tersedia |
Tidak tersedia versi lain