Pricing of innate and discretionary accruals in Australian debt

Date of this Version


Document Type

Journal Article

Publication Details

Accepted version

Aldaman, H., & Duncan, K. (2013). Pricing of innate and discretionary accruals in Australian debt, Accounting and Finance, 53, 31-53.

Access the journal

2013 HERDC submission. FoR: 150103

© Copyright; The Authors; Accounting and Finance; AFAANZ, 2011




This paper addresses the conflicting evidence on the role of accruals in debt pricing. We show that the two subcomponents of accruals quality, innate and discretionary accruals, both impact the debt pricing. Higher innate accruals increases cost of debt, consistent with the prior evidence (Francis et al., 2005; Gray et al., 2009). However, we also find that higher discretionary accruals reduce the cost of debt. This contrasts with the prior evidence of a positive association between discretionary accruals and cost and debt (Francis et al., 2005), and no association (Gray et al., 2009). We show that noisy measurement of cost of debt reconciles these results.

This document is currently not available here.



This document has been peer reviewed.