We examine the relationship between the persistence of the accrual component of earnings and asset conversion cycle, i ….e., the speed of accrual reversal. We argue that, as all accruals have to ultimately reverse, those reversing at a slower … an important determinant of accrual persistence …

decreases when sales drop. Given that the traditional accrual models rely on the assumption of costs responding equally to sales … cost stickiness affects to three of the most common accrual models –the Jones model (J. Jones, 1991), the Dechow and Dichev …