What Determines the Variability of Accounting Accruals?

  • Zhaoyang Gu
  • Chi-Wen Jevons Lee
  • Joshua G. Rosett

DOI: 10.1007/s11156-005-6869-1

Cite this article as:
Gu, Z., Lee, CW.J. & Rosett, J.G. Rev Quant Finan Acc (2005) 24: 313. doi:10.1007/s11156-005-6869-1


The variability of accounting accruals provides a measure of the normal level of managers’ accounting discretion and has important implications for event studies of earnings management. We examine how this measure is related to the economic factors including both firm characteristics and attributes of the disclosure environment. We show that the variability of accruals is related to firm size, leverage, variability of cash flows, operating cycle, growth, and other factors. Significant industry differences and temporal patterns are also found.

Key words

variability of accruals accounting discretion earnings management 

Copyright information

© Springer Science + Business Media, Inc. 2005

Authors and Affiliations

  • Zhaoyang Gu
    • 1
  • Chi-Wen Jevons Lee
    • 2
    • 3
  • Joshua G. Rosett
    • 4
  1. 1.Tepper School of BusinessCarnegie Mellon UniversityPittsburgh
  2. 2.A.B. Freeman School of BusinessTulane UniversityNew Orleans
  3. 3.School of Economics and ManagementTsinghua UniversityBeijingChina
  4. 4.Department of Economics/AccountingClaremont McKenna CollegeClaremont91711

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