"Evidence Of Accruals Anomaly Around The Globe "

Abstract

This paper reviews the empirical researchon accruals anomaly around theglobe.Accruals anomaly is defined as the negative relation between accruals and future stock returns.Starting with Sloan (1996) many papers have documented and confirmed the existence of accrualsanomaly in US capital market. Though, recent papers started to examine the existence of accrualsanomaly outside the US.Overall, empirical results suggest that accruals anomaly is a globalphenomenonpresent in developed countries with large companies and where an accruals accountingsystem exists. The approach adopted is a survey of the literature of accruals anomaly conducted onother samples than US companies. This review splits the discussion in three key topics: (1) empiricalevidence from single country studies, (2) empirical evidencefrom comparative countries studies and(3) empirical evidencefrom US studies. This comparative discussion highlights the importantchallenges generatedbythe accruals anomaly in a global capital market. As a policy implication,investors from all over the globe should enhance their understanding of accruals information asaccruals anomalyis a pervasive anomaly encountered in many capital markets.