Earnings components and the asymmetric timeliness of earnings: The case of FRS 3 in the UK

Ann L C Chan, Stephen W J Lin, Norman Strong

Research output: Contribution to journalArticlepeer-review

Abstract

We exploit a unique setting to examine how an accounting regulation change affects the asymmetric timeliness of earnings. Financial Reporting Standard No. 3: Reporting Financial Performance (FRS 3) changed the way listed UK companies recognised bad news through ordinary or extraordinary items. FRS 3 tightened the definition of extraordinary items but gave wider discretion in classifying exceptional items. The results were that, after FRS 3, the asymmetric timeliness of earnings before extraordinary items increased and the association of earnings conservatism with discretionary accruals was weaker. © 2011 Taylor & Francis.
Original languageEnglish
Pages (from-to)393-410
Number of pages17
JournalAccounting and Business Research
Volume41
Issue number4
DOIs
Publication statusPublished - Sept 2011

Keywords

  • Conservatism
  • Earnings components
  • Frs 3

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