IDEAS home Printed from https://ideas.repec.org/a/bla/joares/v40y2002i4p987-1012.html
   My bibliography  Save this article

Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10–Q Filings

Author

Listed:
  • Steven Balsam
  • Eli Bartov
  • Carol Marquardt

Abstract

The release of the full set of financial statements in Form 10–Q provides investors with the data necessary to estimate the discretionary portion of earnings, thereby allowing them to better assess the integrity of reported quarterly earnings. We thus expect a negative association between unexpected discretionary accruals estimated using 10–Q disclosures and stock returns around 10–Q filing dates. Consistent with our expectations, we document a negative association between unexpected discretionary accruals and cumulative abnormal returns over a short window around the 10–Q filing date. Furthermore, this association varies systematically with investor sophistication. Finally, results from portfolio tests indicate that this association is economically as well as statistically significant. One interpretation of our findings is that accruals management has substantial valuation consequences, which are quickly impounded into stock prices.

Suggested Citation

  • Steven Balsam & Eli Bartov & Carol Marquardt, 2002. "Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10–Q Filings," Journal of Accounting Research, Wiley Blackwell, vol. 40(4), pages 987-1012, September.
    • Handle: RePEc:bla:joares:v:40:y:2002:i:4:p:987-1012
    DOI: 10.1111/1475-679X.00079
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1475-679X.00079
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1475-679X.00079?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:joares:v:40:y:2002:i:4:p:987-1012. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0021-8456 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.