Construct Validity in Accruals Quality Research

ABSTRACT A large body of empirical research in accounting investigates the causes and consequences accruals quality, reaching numerous influential conclusions. Yet little work has been done to systematically evaluate validity underlying measures quality. We these using three criteria: (1) Is measure unaffected by economic determinants accruals? (2) Does consistently reflect errors (3) facilitate tests with sufficient power detect plausible variation accrual errors? Using a combination theoretical modeling numerical simulations, we show that all fail at least one criteria. Our evaluation provides new interpretations existing guides choice interpretation results future research. Data Availability: are available from public sources identified paper. JEL Classifications: M41; C12.