Are accruals actually less persistent than cash flows?

André Aroldo Freitas De Moura, Fabio Motoki, Rafaela Modolo, Joseph Gerakos

Research output: Working paperPreprint

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 languageEnglish
PublisherSSRN
DOIs
Publication statusPublished - 6 Apr 2023

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