Corporate Accruals

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Corporate accruals refer to the accounting adjustments made to recognize revenues and expenses that have been incurred but not yet realized in cash. This practice ensures that financial statements reflect the company's financial position and performance accurately, adhering to the accrual basis of accounting.

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Corporate Attributes and Corporate Accruals

by Dr Md Shamimul Hasan and

This study examines the linear relationship between corporate attributes and corporate accruals (discretionary accruals) in Bangladesh. The behaviour of corporate accruals is explained by corporate attributes such as asset size, turnover,... more

Ly-vC-T1 9107 JONVNid JO IWNYNO! IWNOILLVNYALNI d4! SHL OLLVWILSAV ‘UIDSSOH pup ‘y ‘uDWYpy [npqy“N DWC “S'[W ‘UDSD}] ‘sjensdze a3e4Od40> puke saynquae a3e10d05 ® Table 2. International link of audit firms AE eM Leverage is an important strategy for reducing a company’s weighted average cost of capital. Debt is always considered an important source of finance in the business community. A company cannot pass even a single day without having a loan, for example, short-term loan. In fact, in business it works very much the same was as does blood in the human body. But, long-term loan or debt-capital is not used in che same way as a short-term loan. A company may take out a long-term loan or not, it depends on the financial strength of the company. If the company suffers from a shortage of long-term funds, it will not be able to implement its own invest- ment project. It can therefore arrange a long-term loan to alleviate the financial needs of its investment project. Companies may take out loans from different sources as required and feel comfortable about doing so. Lending institutions al- ways want to safeguard the funds they supply. First of all, they require sufficiently reliable information about the concern they have invested in or are going to invest in. Usually, it is assumed that companies that have debt-capital may engage in over ‘eporting or under reporting earnings, resulting in increased or decreased corporate accruals compared to companies with no debt-capital. Therefore, leverage may be ‘reated as a powerful element in determining the level of corporate accruals. Chow and Wongboren (1987), Malone et al. (1993), Meek et al. (1995), Raffournier

@ Table 3. Correlations matrix if we look at the ordinary least square (OLS) regression analysis, Table 4 shows : significant relationship between asset size and corporate accruals. The graphica representation of ordinary least square model using AMOS appears in Figure 3. Asse size has a significant effect on corporate accruals at the five-percent significance level The other independent variables do not have any significant (linear) effect o1 corporate accruals. In principle, the value of a business is often reflected by its assets therefore, the more assets a company can show on its books, the better it looks t investors and other stakeholders. Generally, companies use resources to earn mone and pay off debts. The assets that are most commonly improperly valued ar inventory, accounts receivable and fixed assets (Omar, 2012, p.7). We observe:

NAV per share in Taka SOURCE: PROBE COMMITTEE REPORT, 201 1; NAV = NET ASSETS VALUE.

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Corporate attributes and corporate accruals

by Normah Omar

2015, AESTIMATIO

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