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Title: Research on accrued earnings and growth about future profitability in China
Authors: Li, Binger 
Issue Date: 2020
Source: Li, B. (2020). Research on accrued earnings and growth about future profitability in China [Unpublished bachelor's degree]. Wenzhou-Kean University.
Abstract: After Sloan (1996) draws the idea that future earnings management is less persistent by using accrual method compared to the cash flow method, researchers keep tracking this issue within a decade. One group of argue rise accounting distortions as a main factor to explain the lower persistence of accrued earnings (Richardson et al. 2006; Wu and Fargher 2007; Dechow and Dichev 2002). The other people think this result is related to growth elements, such as return on assets (Fairfield et al. 2003). In this research paper, I follow the second stream to illustrate why it is less persistence by using accrual methods and the economic background is switched to the Chinese market. Empirically, I find both the growth on long-term net operating assets and accruals have negative coefficients with the one-year-ahead ROA. This showing result is partially due to accounting conservatism as well as the lower investment returns.
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