Abstract
This study examines the discretionary accruals quality of single- and multiple-segment firms. The authors hypothesize and find that the discretionary accruals quality is lower for multiple-segment firms than single-segment firms, and for the same level of discretionary accruals quality, the cost of capital is higher for multiple-segment firms than single-segment firms. These findings suggest that more severe agency problems in multiple-segment firms compared with single-segment firms may lead to poor discretionary accruals quality and agency risk is priced-in as a higher cost of capital.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 496-526 |
| Number of pages | 31 |
| Journal | Journal of Accounting, Auditing and Finance |
| Volume | 27 |
| Issue number | 4 |
| DOIs | |
| State | Published - Oct 2012 |
| Externally published | Yes |
Keywords
- agency costs
- cost of capital
- discretionary accruals quality
- diversification discount
ASJC Scopus subject areas
- Accounting
- Finance
- Economics, Econometrics and Finance (miscellaneous)