Voluntary disclosure of accruals in earnings press releases and the pricing of accruals

Shai Levi*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

42 Scopus citations

Abstract

This study investigates firms' decisions to disclose accruals information in earnings press releases versus to provide it only in 10-Q filings and the impact of this disclosure on the pricing of accruals. I find that firms disclose accruals in their press releases when earnings alone are a weak indication of cash flow performance and that following these disclosures the accruals information is fully impounded into stock prices. The evidence suggests that when investor demand for accruals is likely to exist and firms disclose the information in earnings press releases, the mispricing typically associated with accruals is mitigated.

Original languageEnglish
Pages (from-to)1-21
Number of pages21
JournalReview of Accounting Studies
Volume13
Issue number1
DOIs
StatePublished - Mar 2008
Externally publishedYes

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