Specification and power of cross-sectional abnormal working capital accruals models in the Spanish context
Bibliographic Data
| ID | 19447278 |
|---|---|
| Authors | José J Alcarria Jaime, Belén Gill de Albornoz Noguer (0000-0002-6366-3149, Pathfinder International, corresponding author) |
| Year | 2004 |
| Volume | 13 |
| Issue | 1 |
| Pages | 73-104 |
| Publication date | 2004-01-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | European Accounting Review (JOURNAL) |
| Journal identifiers | ISSN: 0963-8180 • E-ISSN: 1468-4497 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/0963818032000134912 |
| OpenAlex | W1988322036 |
| Language | EN |
| Citations received | 2 |
| References cited | 40 |
Following previous research (e.g. Dechow et al., 1995 Dechow, P. M., Sloan, R. G. and Sweeney, A. P. (1995). Detecting earnings management. Accounting Review, 70(2): pp. 193–225[Web of Science ®] , [Google Scholar]; Peasnell et al., 2000 Peasnell, K. V., Pope, P. F. and Young, S. (2000). Detecting earnings management using cross-sectional abnormal accrual models. Accounting and Business Research, 30(4): pp. 313–326[Taylor & Francis Online] , [Google Scholar]), we use a simulation procedure to evaluate the specification and power of different working capital abnormal accruals models in the Spanish context. Specifically, we assess the Jones Standard model, the Modified Jones model, the Kang and Sivaramakrishnan model, the Margin model, the Jones Cash Flow model, and the Accounting Process model. Consistent with previous research, our results suggest that all the models analysed are well specified in a random sample of firms. Regarding the models' ability to detect artificially induced earnings management, the Jones Cash Flow and the Accounting Process models produce the most powerful tests in all three types of manipulation studied. In line with Peasnell et al. (2000 Peasnell, K. V., Pope, P. F. and Young, S. (2000). Detecting earnings management using cross-sectional abnormal accrual models. Accounting and Business Research, 30(4): pp. 313–326[Taylor & Francis Online] , [Google Scholar]), we find that the Margin model is more powerful than the Jones Standard and the Modified Jones models at detecting non-bad debt expense manipulation, while these two models perform better than the Margin model for revenue and bad debt manipulation. Our results also support the finding by Dechow et al. (1995 Dechow, P. M., Sloan, R. G. and Sweeney, A. P. (1995). Detecting earnings management. Accounting Review, 70(2): pp. 193–225[Web of Science ®] , [Google Scholar]) that their modified version of the Jones model is more powerful than its standard version at detecting revenue-based manipulation
Accounting information system · Accrual · Actuarial science · Cash flow · Debt · Earnings · Earnings Management · Econometrics · Economics · Financial accounting · Machine learning · Revenue · Revenue recognition · Working capital · Auditing, Earnings Management, Governance · Computer Science · Financial Distress and Bankruptcy Prediction · History · Law, Economics, and Judicial Systems · Accounting · Finance
| Citations per year | 0.15 |
|---|---|
| Citation span | 2013 - 2023 (11) |
| Highly cited | No |