Accruals Quality Evaluation Improvement

Abstract

Precise studies of accruals quality evaluation models in the last years show that there are some factors impairing the models' quality of distinguishing normal and abnormal accruals, which results in Type I and type II errors. This research is aimed to recognize these factors in order to improve the models. This research evaluates abnormal accruals of 123 firms listed in Tehran Stock Exchange during the period from 2001 to 2013 using a new measure and also considering sticky accruals, the firm performance, long term accruals and cash flow analysis. This measure ability is compared with other models measures. The results show that the new measure has more ability and less type I and type II errors in distinguishing normal and abnormal accruals.

Keywords

• Accruals Quality
• Abnormal Accruals
• Sticky Accruals
• Earnings Quality