Accrual Anomaly
Short high-accrual (low cash-earnings-quality) firms and long low-accrual firms — Sloan’s earnings-quality sort.
Definition
Accruals ≈ earnings − cash from operations (scaled by assets). Long low accruals, short high. The story is that the market overweights the accrual piece of earnings. Working-capital games show up here.
Why it matters
It is a foundational quality/earnings-quality factor. Less pretty after it was published and after IFRS/US GAAP changes.
Case
A channel-stuffing year: accruals spike, the short is the tell, the long is the boring cash earner. Then the factor becomes well-known and crowded.
How to read it
Definition (balance-sheet vs cash-flow), financials exclusion, and post-publication decay. Pair with a cash-flow confirm.
Key papers
Landmark references with real publisher or arXiv links — not token-overlap noise.
- Do Stock Prices Fully Reflect Information in Accruals and Cash FlowsSloan · 1996 · The Accounting ReviewThe accrual anomaly.