Exploring the Accrual Landscape by Open Science

Accounting and Management Control

Speaker: Joachim Gassen (Humboldt University, Berlin)

Room T004

Abstract:

In an influential study, Bushman, Lerman, and Zhang (2016) document that the cash flow
accrual association diminishes over time in the U.S. They identify non-timing related accruals as
the main determinant of this trend. I reproduce, explore and extend their findings, both within
the U.S. and internationally, to provide three contributions to the literature. First, I document
how multicollinearity affects the reliability of their findings. Second, by exploring U.S. data as
well as an international panel sample, I show that changes in the underlying cash flow distribution
explain a large part of the observed variation in the cash flow accrual association. The remaining
time-trend is relatively robust across countries. It is confined to the nineties and associated with
changes in the number of listed firms as well as with the relative share of intangible intensive
industries. All these observations seem largely at odds with accounting standards driving the
changes in the cash flow accrual association. Third, by providing an interactive presentation of
my key results online (click here to ExPanD) and by disclosing all of my material together with
an Appendix detailing the necessary steps to reproduce my work, I hope to promote the benefits
of open science to accounting research.
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