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The Impact of Accounting Accruals Before, During, and After an Economic Crisis: Evidence from South Africa

Author

Listed:
  • John H. Hall
  • Elda du Toit
  • Rudra P. Pradhan

    (University of Pretoria)

Abstract

The study investigates the influence of accruals before, during, and after the global financial crisis of 2008. The study confirms findings from previous studies, showing there is a high persistence of earnings and cash earnings are more persistent than accruals. However, the accrual anomaly did not have a consistent effect on share returns over the three periods. During and after the economic crisis, the effect of cash earnings and accruals on total earnings and share price were higher than before the economic crisis. The results show that the accrual component of earnings influences the reliability of future earnings.

Suggested Citation

  • John H. Hall & Elda du Toit & Rudra P. Pradhan, 2022. "The Impact of Accounting Accruals Before, During, and After an Economic Crisis: Evidence from South Africa," The African Finance Journal, Africagrowth Institute, vol. 24(1), pages 50-64.
    • Handle: RePEc:afj:journl:v:24:y:2022:i:1:p:50-64
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-finj_v24_n1_a5
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    More about this item

    Keywords

    Value relevance; Accruals; Earnings persistence; Share return; Global economic crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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