The accrual anomoly: Australian evidence

Clinch, GJ; Fuller, D; Govendir, B; Wells, PA

The accrual anomoly: Australian evidence

Clinch, GJ Fuller, D Govendir, B

Wells, PA

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Publisher:: AFAANZ
Publication Type:: Conference Proceeding
Citation:: 2007 AFAANZ Conference, 2007, pp. 1 - 37
Issue Date:: 2007-01

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Field	Value	Language
dc.contributor.author	Clinch, GJ	en_US
dc.contributor.author	Fuller, D	en_US
dc.contributor.author	Govendir, B https://orcid.org/0000-0002-7112-0267	en_US
dc.contributor.author	Wells, PA https://orcid.org/0000-0001-6822-4826	en_US
dc.contributor.editor	Stewart, J	en_US
dc.contributor.editor	Hay, D	en_US
dc.date	2007-07-01	en_US
dc.date.issued	2007-01	en_US
dc.identifier.citation	2007 AFAANZ Conference, 2007, pp. 1 - 37	en_US
dc.identifier.uri	http://hdl.handle.net/10453/11456
dc.description.abstract	This paper investigates whether the accrual anomaly identified by Sloan (1996), whereby investors overestimate the impact of accruals on the persistence of earnings exists within an Australian context. While there is general support for the existence of the anomaly in Australia there are a number of idiosyncrasies in the results. First, there is evidence that in Australia investors underestimate the persistence of earnings. Second, there are greater errors in assessing the impact of cash flows on the persistence of earnings than accruals (i.e., a cash flow anomaly rather than an accruals anomaly). Third, returns to the hedged portfolio trading strategy are increasing over the three year period subsequent to portfolio formation. Analysis of these results indicates that they are primarily attributable to a limited number of firm year observations in the extreme positive tail of returns. Additionally, a range of sensitivity tests were undertaken to address the robustness of these results.	en_US
dc.publisher	AFAANZ	en_US
dc.relation.ispartof	2007 AFAANZ Conference	en_US
dc.relation.ispartof	Accounting and Finance Association of Australia and New Zealand Conference	en_US
dc.title	The accrual anomoly: Australian evidence	en_US
dc.type	Conference Proceeding
utslib.location	Gold Coast, Australia	en_US
utslib.location.activity	Gold Coast, Australia	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
dc.location.activity	Gold Coast, Australia	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	open_access
pubs.consider-herdc	false	en_US
pubs.place-of-publication	Gold Coast, Australia	en_US
pubs.start-date	2007-07-01	en_US

Abstract:

This paper investigates whether the accrual anomaly identified by Sloan (1996), whereby investors overestimate the impact of accruals on the persistence of earnings exists within an Australian context. While there is general support for the existence of the anomaly in Australia there are a number of idiosyncrasies in the results. First, there is evidence that in Australia investors underestimate the persistence of earnings. Second, there are greater errors in assessing the impact of cash flows on the persistence of earnings than accruals (i.e., a cash flow anomaly rather than an accruals anomaly). Third, returns to the hedged portfolio trading strategy are increasing over the three year period subsequent to portfolio formation. Analysis of these results indicates that they are primarily attributable to a limited number of firm year observations in the extreme positive tail of returns. Additionally, a range of sensitivity tests were undertaken to address the robustness of these results.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/11456