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Construct validity in accruals quality research

Nezlobin, Alexander, Sloan, Richard G. and Giedt, Jenny Zha (2022) Construct validity in accruals quality research. Accounting Review, 97 (5). 377 – 398. ISSN 0001-4826

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Identification Number: 10.2308/TAR-2019-0213


A large body of empirical research in accounting investigates the causes and consequences of accruals quality, reaching numerous influential conclusions. Yet little work has been done to systematically evaluate the validity of the underlying measures of accruals quality. We evaluate these measures using three criteria: (1) Is the measure unaffected by the underlying economic determinants of accruals? (2) Does the measure consistently reflect errors in accruals? (3) Does the measure facilitate tests with sufficient power to detect plausible variation in accrual errors? Using a combination of theoretical modeling and numerical simulations, we show that all measures fail at least one of these criteria. Our evaluation provides new interpretations of existing research and guides the choice of measures and the interpretation of results in future research. Data Availability: Data are available from the public sources identified in the paper.

Item Type: Article
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Additional Information: © 2021 American Accounting Association
Divisions: Accounting
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Q Science > QA Mathematics
JEL classification: M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M41 - Accounting
C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C12 - Hypothesis Testing
Date Deposited: 01 Oct 2021 12:03
Last Modified: 16 May 2024 03:28

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