Abstract
Prior literature finds that cash flows are more persistent than accruals. We show that this finding arises from empirical specifications that do not completely incorporate non-current accruals and do not account for accrual estimation errors. We develop a specification that addresses these two issues and then show that accruals are more persistent than cash flows. In addition, we develop and apply an approach to validate accrual specifications.
Original language | English |
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Publisher | SSRN |
Publication status | Published - 6 Apr 2023 |