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Interfirm differences in earnings variability: an analysis of fundamentals, cash flows and accruals
Author(s) -
Silhan Peter A.
Publication year - 2014
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12038
Subject(s) - accrual , cash flow , earnings , operating cash flow , econometrics , economics , sample (material) , earnings management , business , accounting , chemistry , chromatography
Prior research shows that the time‐series variability of corporate earnings affects forecasting accuracy and corporate risk, yet little is known about the determinants of earnings variability. This study analyses interfirm differences in earnings variability. Large‐sample evidence shows how the ratio of accrual variability to cash‐flow variability varies across a cross‐section of firms and how these components and the correlation between contemporaneous cash flows and accruals are related to key economic fundamentals.