Prior studies suggest that VCs play a monitoring role. We predict and find that IPO-year abnormal accruals are lower in the presence of VCs for a sample of 2630 IPO firms during 1983-2001. Our findings are robust to controls for the endogenous choice of VC financing. We consistently find that...

We consider stock markets in 20 countries to investigate whether the accrual anomaly (Sloan 1996), characterized by U.S. stock prices overweighting the role of accrual persistence, is a local manifestation of a global phenomenon. We explore whether the occurrence of the anomaly is related to...

Recent research provides evidence that the operating cash flows-to-price ratio subsumes accruals in explaining future annual returns. This suggests that the accrual anomaly is part of the overall value-glamour anomaly and does not represent the mispricing of earnings. We extend the literature by...

We show that the accrual anomaly documented by Sloan (1996) is concentrated in firms with high idiosyncratic stock return volatility making it risky for risk-averse arbitrageurs to take positions in stocks with extreme accruals. Moreover, the accrual anomaly is found in low price and low volume...

This study examines the relationship between earnings management by firms offering seasoned equity issues and the pricing of their offers. We hypothesize that seasoned equity offering (SEO) firms employing aggressive accounting decisions also more aggressively push up their offer prices, thereby...

Several prior studies have shown that cash flows have significantly greater impact on stock prices than accruals. We examine the implications of these findings for the post-earnings-announcement-drift anomaly. We argue that, if investors under-react to earnings news, then the larger price impact...

Given the recent controversy over deviations of street earnings from GAAP earnings, we show that the nonrecurring items that analysts include in street earnings are more persistent and have higher valuation multiples than those items they exclude from street earnings. In addition, we find no...

This paper extends the work of Sloan (1996) by linking accrual reliability to earnings persistence. We construct a model showing that less reliable accruals lead to lower earnings persistence. We then develop a comprehensive balance sheet categorization of accruals and rate each category...

We examine whether and how managers use loan loss provisions to smooth income and to signal their private information about their banks' future prospects. Our paper highlights that the use of the loan loss provision to accomplish more than one objective gives rise to situation-specific costs and...

Prior studies suggest that managers use their reporting discretion to signal their private information. Because managers are often assumed to use their discretion to mislead investors, we conjecture that, without a second corroborating signal, discretionary accruals are likely to be regarded as...