This paper studies whether IFRS adoption and the country's legal regime affect the value relevance of discretionary accruals under environmental uncertainty (measured by sales variability). The sample includes France and UK domiciles, providing a code/common law legal regime partition. We show...

Income trusts are rapidly emerging as a key force in Canadian capital markets and their unit market capitalisation exceeded 300 billion Canadian dollars by early 2008. One of the peculiarities of income trusts is that GAAP-derived measures, such as earnings, are replaced by non-GAAP measures,...

We formulate well-known discretionary accruals models in an investment setting. Given that accruals basically consist of short-term investment, we introduce, (i) cash-flows, as a proxy for financial constraints and other financial markets imperfections, and (ii) Tobin’s q as a measure of...

Income trusts are rapidly emerging as a key force in Canadian capital markets and their unit market capitalisation exceeded 300 billion Canadian dollars by early 2008. One of the peculiarities of income trusts is that GAAP-derived measures, such as earnings, are replaced by non-GAAP measures,...

Following Zhang (Accounting Review, 2007) we cast firm accruals in terms of short-term investment. Since many studies consider accruals as a smoothed measure of cash flows, we first adopt Zhang specification and augment the standard Jones model with a cash-flow variable. Second, if accruals are...

According to the neoclassical theory of investment, if firms’ accruals are a form of short-term investment they should be greatly influenced by the shadow price of capital, namely Tobin’s q. In the presence of financial market imperfections, cash-flows should also impact accruals since they...