alexa The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative?
Business & Management

Business & Management

Journal of Business & Financial Affairs

Author(s): Dan Givoly, Carla Hayn

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This paper documents changes in the patterns of earnings, cash flows and accruals over the last four decades. In the absence of a generally accepted definition of conservatism, a number of measures of reporting conservatism are identified and examined. These measures rely on the accumulation of nonoperating accruals, the timeliness of earnings with respect to bad and good news, characteristics of the earnings distribution and the market-to-book ratio. The patterns are consistent with an increase in conservative financial reporting over time. The findings have implications for accounting standard setting, regulation of financial information and financial statement analysis.

This article was published in Journal of Accounting and Economics and referenced in Journal of Business & Financial Affairs

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