Abnormal Accrual Models: Detect Earnings Management
Not what you're looking for?
Discuss how the abnormal accrual models in the literature are used to help detect earnings management. These models are widely used in accounting research; provide an example with citation (and link if available), and discuss the major finding and use of the model.
In your answer explain the concept of an abnormal accrual from the perspective of the accounting research and any other technical terms you refer to that would not be understood by someone who just completed an undergraduate degree in accounting.
Purchase this Solution
Solution Summary
About 200 words and three academic peer-reviewed articles to support the concepts discussing abnormal accural models used for detecting earnings management.
Solution Preview
In the literature, researchers presume that abnormal accruals (unexpectedly high or low given changes in assets or revenue and in the industry) are a proxy for earnings management (Dopuch et al, 2012). That is, accruals for warranties and other estimated future liabilities are judgment calls and so if you want earnings to have a smooth upward curve, you can change an accrual a bit to "smooth" earnings (up or down). However, some work has challenged that assumption. For instance, ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Learning Lean
This quiz will help you understand the basic concepts of Lean.