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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Accruals quality vis-a-vis disclosure quality: Substitutes or complements?
Author(s): Mouselli, Sulaiman
Jaafar, Aziz
Hussainey, Khaled
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Keywords: Accruals quality
Asset pricing
Disclosure quality
Information risk
Issue Date: Mar-2012
Date Deposited: 7-Jan-2013
Citation: Mouselli S, Jaafar A & Hussainey K (2012) Accruals quality vis-a-vis disclosure quality: Substitutes or complements?. British Accounting Review, 44 (1), pp. 36-46.
Abstract: The impact of accruals quality and disclosure quality on stock returns is a topical issue in market-based accounting research. Most of the debate is centred on their incremental ability to predict future earnings. Recent studies suggest that higher information risk proxied by either lower accruals quality or lower disclosure quality results in higher stock returns. This paper examines the relationship between accruals quality and disclosure quality, and investigates whether they are complements or substitutes in explaining the time-series variation in portfolio returns. Applying portfolio groupings, we find a positive association between accruals quality and disclosure quality, suggesting that firms with higher disclosure quality engage less in earnings management and have higher accruals quality. Asset pricing tests show that an accruals quality factor and a disclosure quality factor explain the time-series variation in the excess returns of similar sets of portfolios. This suggests that they contain similar information and confirms the substitutive nature of accruals quality and disclosure quality factors.
DOI Link: 10.1016/
Rights: Published in The British Accounting Review by Elsevier; Elsevier believes that individual authors should be able to distribute their accepted author manuscripts for their personal voluntary needs and interests, e.g. posting to their websites or their institution’s repository, e-mailing to colleagues. The Elsevier Policy is as follows: Authors retain the right to use the accepted author manuscript for personal use, internal institutional use and for permitted scholarly posting provided that these are not for purposes of commercial use or systematic distribution. An "accepted author manuscript" is the author’s version of the manuscript of an article that has been accepted for publication and which may include any author-incorporated changes suggested through the processes of submission processing, peer review, and editor-author communications.

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