Modelling the accruals process and assessing unexpected accruals*

Table 4: Summary of the Bias in Unexpected Accruals for the Encompassing
Model
NACC NACC0 j
Cell 1:
t, j AbACC j
NACC NACC0 j
Cell 4:
t, j AbACC j
NACC NACC0 j
Cell 7:
Uncertain
AbACC 0 AbACC 0 AbACC 0
Cell 2:
t, j AbACC j
Cell 5:
t, j AbACC j
Cell 8:
, AbACC t j j
Cell 3:
Uncertain
Cell 6:
t, j AbACC j
Cell 9:
, AbACC t j j
Table 4 summarizes the bias in unexpected accruals relative to abnormal accruals for the encompassing model.
WC DA REV REV REV NCO NCO
t t u, t1 u, t u, t1 u, t1 u, t
j j 0, t 1, t j 2, t j 3, t j 4, t j 5, t j t, j
represents the error term extracted from the encompassing model.
t, j
NACC (
j
55
AbACC ) represents the
j
normal (abnormal) accruals based on the observation specific parameter from the encompassing model and
NACC ( AbACC ) represents the normal (abnormal) accruals based on the regression parameter from the
encompassing model.