Impact of accrual reversals on corporate performance: evidence from emerging economy

This study examines the impact of accrual reversal on corporate performance. This study constructs a balanced panel data from the data for the period of 2009-2018. This study used a multivariate econometric model for examining the predictive power of accrual reversals on forecasting the firm performance. The study used the OLS estimation technique as the estimation model. Nevertheless, the relevant test results from random and fixed effect tests were opted using likelihood and Hausman test. The findings of the study revealed that accrual reversals have a significant positive effect on the company's earnings, which is considered beneficial for company growth in the emerging economy. The results help the stakeholders, managers, and investors in fully understanding the effect of accruals on firm performance and predicting the future performance of a firm. However, listed firms must increase the total accruals reversal to attract investment and enhance performance.