This analysis shows that the most relevant difference between BR and ER is extraordinary items, which is a logical difference given that the heading appears in the accrual statement only.
A similar situation is seen in the timing of recognition of current expenses, where results show no differences between budgetary and accrual expenses in 40% of cases.
This leads us to reject the hypothesis that the length of experience of the entities in the use of accrual accounting increases differences over time.
We use Fama and MacBeth (1973) cross-sectional regressions to compare large and small firms in the relation between future returns and the scaled portfolio rank of accruals, controlling for factors that relate to future abnormal returns.
In column 1, we focus on the accruals and their interactions with the two size dummies.
We find that after controlling for the ERC, neither large nor small firms earn any extra significant announcement abnormal returns from accruals beyond those of medium-sized firms.
However, by using the European Public Sector Accounting Standards (EPSAS) in the EU, an accrual measure was developed based on accrual-based IPSAS and European System of Accounts (ESA).
Accrual transactions and timely recognition of revenues and expenses when they are incurred (regardless of cash received for revenues and paid for expenses) creates the full picture of future cash flows, thus enhancing cash management and prediction (Berger, 2018).
We first define accruals quality as the standard deviation of past loss reserve errors as in Eckles, Halek, and Zhang (2014) who use the standard deviation of the past 5 years of loss reserve errors.
Equation (2) provides our measures of overall accruals quality, A[Q.sub.j,i, t] (j [member of] [3,4,5,10]) for each firm i in year t.
Hao investigated the accruals reliability, not pricing of the accruals and operating cycle among the companies.
So far several researches have been published about informational content of the accruals based on empirical evidence from Iran capital market.