Information Asymmetry and the Accrual Anomaly

Sang H Park, Ingoo Han, Jaywon Lee, Boyoung Kim

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


This study investigates the association between information asymmetry and the accrual anomaly. Prior literature argues that earnings management is pronounced among firms with high information asymmetry and that earnings management is the main phenomenon behind the accrual anomaly. Using 43 205 firm-year observations from the CRSP/Compustat Merged (CCM) universe spanning 1975–2012, we provide empirical evidence that the accrual anomaly is generally concentrated in firms with higher information asymmetry. Additional analysis reveals that, investors’ greater overestimation mainly takes a place in firms with negative accruals, rather than positive accruals, due to investors’ risk-aversion tendencies.

Original languageEnglish (US)
Pages (from-to)571-597
Number of pages27
JournalAsia-Pacific Journal of Financial Studies
Issue number4
StatePublished - Aug 2018


  • Abnormal returns
  • Accrual anomaly
  • Information asymmetry
  • Mishkin test
  • Persistence of accruals

ASJC Scopus subject areas

  • Finance


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