Articulation-based accruals

Ryan Casey, Feng Gao, Michael Kirschenheiter, Siyi Li, Shailendra Pandit

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


We build an articulating financial statements model in which the beginning and ending balance sheet amounts are explicitly linked to accruals. We distinguish accruals based on the source financial statement of the accruals, either the cash flow statement, balance sheet, or statement of owners’ equity. We then examine how the accrual-generating source affects the relations between accruals and future earnings and stock returns. While prior studies document a negative association between accruals and future earnings and returns, we find accruals relating to the current operating section of the balance sheet are positively associated with future earnings. Further, accruals originating from net financial asset via the statement of owners’ equity are positively associated with future returns. We also show that equity investment and discontinued asset accruals differ from operating asset accruals in their association with future earnings.

Original languageEnglish (US)
Pages (from-to)288-319
Number of pages32
JournalReview of Accounting Studies
Issue number1
StatePublished - Mar 1 2017

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)


  • Financial statement articulation
  • Financing accruals
  • Operating accruals

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