Financial distress, relative performance and takeovers as drivers for abnormal accruals

Lingyan Zuo, Simon Hussain*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Our article examines abnormal accruals for a large sample of UK firms between 1994 and 2004, standardized so as to control for firm size, profitability, growth, information asymmetry and debt. We find that financial distress, proxied by a bankruptcy prediction model developed for UK firms (Charitou et al., 2004), and profitability relative both to cross-sectional and industry-specific norms, are important determinants of abnormal accruals: this is consistent with Peasnell et al. (2000) and Butler et al. (2004). Our results also confirm the suggestion by Jiraporn (2005) that abnormal accruals for acquired firms do not appear to display a particular 'sign'.

Original languageEnglish
Pages (from-to)183-186
Number of pages4
JournalApplied Financial Economics Letters
Volume4
Issue number3
DOIs
Publication statusPublished - May 2008
Externally publishedYes

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