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Defining, measuring, and modeling accruals: a guide for researchers

Author

Listed:
  • Chad R. Larson

    (University of Houston)

  • Richard Sloan

    (University of Southern California)

  • Jenny Zha Giedt

    (George Washington University)

Abstract

Research on accounting accruals is pervasive. Yet the measurement and modeling of accruals has developed in an ad hoc manner, resulting in a fragmented and incomplete body of research. Our goal is to rectify this situation by (i) providing a comprehensive definition of accruals, (ii) formulating a corresponding empirical measure of accruals, (iii) offering two decompositions of our measure that encapsulate the major classes of accruals studied elsewhere, (iv) combining and expanding prior models of the fundamental determinants of accruals into one parsimonious model, and (v) identifying the primary determinants of each of the major classes of accruals. We close by providing guidance for researchers in tailoring the selection of accruals to the research question at hand.

Suggested Citation

  • Chad R. Larson & Richard Sloan & Jenny Zha Giedt, 2018. "Defining, measuring, and modeling accruals: a guide for researchers," Review of Accounting Studies, Springer, vol. 23(3), pages 827-871, September.
    • Handle: RePEc:spr:reaccs:v:23:y:2018:i:3:d:10.1007_s11142-018-9457-z
    DOI: 10.1007/s11142-018-9457-z
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    More about this item

    Keywords

    Accruals; Operating accruals; Financial accruals; Conditional conservatism; Cash flows;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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