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Review of Accounting Studies

, Volume 23, Issue 3, pp 827–871 | Cite as

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

  • Chad R. Larson
  • Richard Sloan
  • Jenny Zha Giedt
Article
  • 202 Downloads

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.

Keywords

Accruals Operating accruals Financial accruals Conditional conservatism Cash flows 

JEL Classification

M41 C23 D21 G32 

Notes

Acknowledgements

We are grateful for helpful discussions with Patricia Dechow, Alexander Nezlobin, and Peter Pope and for the comments of Russell Lundholm, Jim Ohlson, Bob Resutek, Mark Soliman, an anonymous reviewer, and workshop participants at the 2017 Tulane University Accounting Research Conference, the 2017 Review of Accounting Studies Conference, George Washington University and Vanderbilt University. We thank Ryan Erhard for research assistance.

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© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.C.T. Bauer College of BusinessUniversity of HoustonHoustonUSA
  2. 2.Marshall School of BusinessUniversity of Southern CaliforniaLos AngelesUSA
  3. 3.School of BusinessGeorge Washington UniversityWashingtonUSA

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