Effect of Prior Periods Intangible Return on Relationship between Accruals and Future Return

Abstract

Thenegative relation between accruals and future return, knownas accrualanomaly, introduced by sloan (1996) in accounting literature. He represented that accrual mispricing is the cause of this anomaly. Moreover, the results of resutek,s research (2010) presented intangible return as an effective factor on relation between accruals and future return. Intangible return indicates information's about future growth opportunities that not recognize by accounting criterions in periods of accruals recognition. In this research, besides investigating the relation between accruals and future return, the effect of prior period's intangible return on relation between accruals and future return is examined. For this intent, a sample of 80 firms listed in Tehran stock exchange during the period of 1999-2010 examined. For test research hypotheses is used of multivariate and univariate regression analyse by pooling data method. The results of the assessment showed a meaningful and negative relation between accruals and future return (accrual anomaly). In addition, prior period's intangible return is effective on relation between accruals and future return. In other words, with import this variable in research model, the meaningful and negative relation between accruals and future return disappear.

Keywords

• accrual anomaly
• intangible return
• persistence argument
• growth argument