Prior research shows that the time-series variability of corporate earnings affects forecasting accuracy and corporate risk, yet little is known about the determinants of earnings variability. This study analyses interfirm differences in earnings variability. Large-sample evidence shows how the ratio of accrual variability to cash-flow variability varies across a cross-section of firms and how these components and the correlation between contemporaneous cash flows and accruals are related to key economic fundamentals.
- Accrual accounting
- Earnings variability
- Economic fundamentals
ASJC Scopus subject areas
- Economics, Econometrics and Finance (miscellaneous)