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| Author: | Kothari, S. P. Leone, A. J. Wasley, C. E. |
| Title: | Performance matched discreationary accrual measures |
| Journal: | Journal of Accounting & Economics
2005 : FEB, VOL. 39:1, p. 163-197 |
| Index terms: | assets earnings reliability |
| Language: | eng |
| Abstract: | This article investigates the specification and power of tests based on performance-matched discretionary accruals, and makes comparisons with tests using traditional discretionary accrual measures. Performance matching on return on assets controls for the effect of performance on measured discretionary accruals. It is suggested that performance-matched discretionary accrual measures enhance the reliability of inferences from earings management research when the hypothesis being tested does not imply that earnings management will vary with performance, or where the control firms are not expected to have engaged in earnings management. |
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