Abstract
This study investigates the existence of quarterly accrual anomalies in Taiwan's stock market. Our empirical results indicate that the arbitrage portfolios formed by the accounting accruals of the fourth‐quarter financial reports could result in abnormal returns, and thus, inferred that quarterly accrual anomalies exist. We further examined the causes of the accrual anomalies and determined that the manager conduct earnings management behavior during the fourth quarter. Managers execute discretionary accruals for management earnings forecast to meet previously issued financial forecasts, which leads to the fourth‐quarter accrual anomalies. The portfolios formed by using discretionary accruals and management earnings forecasts produce arbitrage portfolios with optimal return.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
