Impact of Operating Cycle on the Informational Usefulness of Accruals

영업주기가 발생의 정보유용성에 미치는 영향

  • 김정재 (대구대학교 경상대학 회계학과)
  • Received : 2018.09.06
  • Accepted : 2018.10.20
  • Published : 2018.10.31


Accrual system in accounting aims to align timing difference between cash inflow or outflow and recognition of revenue or expense. However, the implementation of the accrual system requires judgement and forecasting. In addition, the longer operating cycle results in more uncertainties and less precision in measurement and recognition. The purpose of this research is to examine the value relevance of accruals and cash flow from operations using samples partitioned on the length of operating cycles. It is hypothesized that the longer operating cycle contributes to the increase in uncertainty and more discretionary judgment in applying accrual system. As expected, a strong sign of value relevance of accruals and cash flow from operations in short operating cycles samples has been found. However, in the longest operating cycle sample, the value relevance of accruals and CFOs obtained in the former samples virtually disappear. The value relevance of accruals remain partly in the longest operating cycle sample because accruals contribute to decision usefulness through the timing role of accruals.


Supported by : 대구대학교


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