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Do Accruals Exacerbate Information Asymmetry In The Market?, Sonia Wasan
Do Accruals Exacerbate Information Asymmetry In The Market?, Sonia Wasan
LSU Doctoral Dissertations
A considerable body of evidence, both archival and experimental, suggests that accounting accruals are heterogeneously interpreted by investors. In this study, I examine whether the information asymmetry among investors arising from this heterogeneous interpretation, implied in these empirical results, affects transactions costs in the form of the bid-ask spread and its adverse selection component. I examine this impact both, in general, for all trading activity occurring for a firm over a continuous flow of information during the year and around the first release of accrual information for each quarter. The results of the study provide empirical evidence of a positive …
Using The Fasb's Qualitative Characteristics In Earnings Quality Measures, Abhijit Barua
Using The Fasb's Qualitative Characteristics In Earnings Quality Measures, Abhijit Barua
LSU Doctoral Dissertations
In this study, I develop a measure of earnings quality by using qualitative characteristics of financial statement information specified in the Statement of Financial Accounting Concepts (SFAC) No. 2 (FASB 1980). I derive a summary measure of earnings quality by applying factor analysis on fifteen variables representing different components of two primary dimensions of earnings quality: relevance and reliability. I then test the validity of the earnings quality construct by examining whether the construct reflects decision usefulness that is operationalized in two ways: value relevance and cost of capital analyses. I provide empirical evidence suggesting that the earnings quality construct …