Innate and discretionary accruals quality and corporate governance

Pamela Kent, James Routledge, Jenny Stewart

Research output: Contribution to journalArticleResearchpeer-review

71 Citations (Scopus)

Abstract

This paper extends previous research on the association between corporate governance mechanisms and accruals quality. We derive measures of the discretionary and innate components of accruals quality and regress them against corporate governance characteristics. For discretionary accruals, we find use of a Big 4 audit firm and a larger audit committee as the primary governance mechanisms associated with higher accruals quality. For innate accruals quality, we find that higher quality is associated with an independent board of directors, a larger, more independent and more active audit committee, and use of a Big 4 audit firm. Our findings suggest a stronger relation between sound governance mechanisms and innate accruals quality than discretionary accruals quality.

Original languageEnglish
Pages (from-to)171-195
Number of pages25
JournalAccounting and Finance
Volume50
Issue number1
DOIs
Publication statusPublished - Mar 2010

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Corporate governance
Discretionary accruals
Accruals quality
Audit committee
Governance mechanisms
Audit firms
Big 4
Corporate governance mechanisms
Board of directors

Cite this

Kent, Pamela ; Routledge, James ; Stewart, Jenny. / Innate and discretionary accruals quality and corporate governance. In: Accounting and Finance. 2010 ; Vol. 50, No. 1. pp. 171-195.
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Innate and discretionary accruals quality and corporate governance. / Kent, Pamela; Routledge, James; Stewart, Jenny.

In: Accounting and Finance, Vol. 50, No. 1, 03.2010, p. 171-195.

Research output: Contribution to journalArticleResearchpeer-review

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