Accounting Papers

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Journal Article

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Journal of Accounting Research





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Ball and Shivakumar (2005) augment existing models of expected accruals to incorporate conditional conservatism. They document a robust asymmetry in the relation between accruals and economic losses and gains, and demonstrate that accruals models that incorporate this asymmetry have increased explanatory power. This discussion of Ball and Shivakumar (2005) makes five main points: 1) incorporating asymmetry in gain and loss recognition is an important contribution to empirical models of expected accruals; 2) the economic underpinnings of asymmetry in loss and gain recognition remain open to considerable debate; 3) the extent to which accruals recognize gains in a timely manner remains an interesting but unanswered question; 4) non-working capital accruals are important to both the earnings process and accounting conservatism, yet modeling of nonworking capital accruals has received little attention in the literature; and 5) incorporating asymmetry into the accruals process has important implications for estimating discretionary accruals and for future research in this area.

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This is the peer reviewed version of the following article: GUAY, W. (2006), Discussion of The Role of Accruals in Asymmetrically Timely Gain and Loss Recognition. Journal of Accounting Research, 44: 243–255., which has been published in final form at DOI: 10.1111/j.1475-679X.2006.00199.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving

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Date Posted: 27 November 2017

This document has been peer reviewed.