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Pricing of innate and discretionary accruals in Australian debt
Accounting and Finance
  • Husam Aldamen, Qatar University
  • Keith Duncan, Bond University
Date of this Version
Document Type
Journal Article
Publication Details

Accepted version

Aldaman, H., & Duncan, K. (2013). Pricing of innate and discretionary accruals in Australian debt, Accounting and Finance, 53, 31-53.

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2013 HERDC submission. FoR: 150103

© Copyright; The Authors; Accounting and Finance; AFAANZ, 2011

This paper addresses the conflicting evidence on the role of accruals in debt pricing. We show that the two subcomponents of accruals quality, innate and discretionary accruals, both impact the debt pricing. Higher innate accruals increases cost of debt, consistent with the prior evidence (Francis et al., 2005; Gray et al., 2009). However, we also find that higher discretionary accruals reduce the cost of debt. This contrasts with the prior evidence of a positive association between discretionary accruals and cost and debt (Francis et al., 2005), and no association (Gray et al., 2009). We show that noisy measurement of cost of debt reconciles these results.
Citation Information
Husam Aldamen and Keith Duncan. "Pricing of innate and discretionary accruals in Australian debt" Accounting and Finance (2013) ISSN: 0810-5391
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