City Research Online

Abstract

We investigate the association between managerial ability and revenue-expense matching. We find that firms having more capable managers exhibit a better contemporaneous revenue-expense matching, partly attributable to their ability at accrual estimation. We also find that the association between current revenue and past expense is weaker for firms having more talented managers due to cash flow effects. These findings are robust to a battery of control variables and to alternative proxies of managerial ability. Our study indicates that the relation between managerial ability and earnings attribute could be a function of accrual estimation process as well as real business decision. JEL codes: G32.

Publication Type:	Article
Additional Information:	This is an Accepted Manuscript of an article published by Taylor & Francis in Asia-Pacific Journal of Accounting & Economics on 14 Sep 2021, available at: https://doi.org/10.1080/16081625.2021.1977663
Publisher Keywords:	managerial ability; revenue-expense matching; accrual estimation; real business decision
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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