What is it about?
Discretionary accruals have been extensively studies in corporate finance. We show for the first time how they can affect corporate cash savings and therefore the value of cash of corporations in the United States.
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Why is it important?
This is the first paper studying the effects of discretionary accruals on corporate savings. The findings shows that discretionary accruals is a viable determinant of firm cash saving policies and also points to more aggravated shareholder-manager conflicts in the decisions to save. Moreover, this study extends the literature related to discretionary accruals in earnings management. The empirical evidence highlights discretionary accruals have negative effect on market-perceived cash-value, which underscores the insight that managers manage earnings opportunistically using discretionary accruals.
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This page is a summary of: Corporate cash savings and discretionary accruals, China Finance Review International, April 2020, Emerald, DOI: 10.1108/cfri-09-2019-0139.
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