The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative?

Dan Givoly*, Carla Hayn

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

638 Scopus citations

Abstract

This paper documents changes in the patterns of earnings, cash flows and accruals over the last four decades. In the absence of a generally accepted definition of conservatism, a number of measures of reporting conservatism are identified and examined. These measures rely on the accumulation of nonoperating accruals, the timeliness of earnings with respect to bad and good news, characteristics of the earnings distribution and the market-to-book ratio. The patterns are consistent with an increase in conservative financial reporting over time. The findings have implications for accounting standard setting, regulation of financial information and financial statement analysis.

Original languageEnglish
Pages (from-to)287-320
Number of pages34
JournalJournal of Accounting and Economics
Volume29
Issue number3
DOIs
StatePublished - Jun 2000
Externally publishedYes

Keywords

  • Accruals
  • C23
  • Cash flows
  • Conservatism
  • D21
  • Earnings
  • Earnings variability
  • G38
  • Losses
  • M41
  • Market-to-book ratio
  • N20
  • Skewness

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