<heading id="h1" level="1" implicit="yes" format="display">ABSTRACT</heading>Prior research shows that the cash component of earnings is more persistent than the accrual component. We decompose the cash component into: (1) the change in the cash balance, (2) issuances/distributions to debt, and (3) issuances/distributions to equity. We find that the higher...

This paper evaluates the implications of nondiscretionary accruals for earnings management and market-based accounting research. We develop a simple model in which earnings management is absent and nondiscretionary accruals perform their intended function of insulating earnings from non-cash...