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Title: Does cash-based operating profitability explain the accruals anomaly in China?
Authors: Du, Q 
Wang, Y 
Wei, KCJ 
Issue Date: Jun-2020
Source: Pacific basin finance journal, June 2020, v. 61, 101336
Abstract: We investigate the relations between accruals, operating profitability, cash-based operating profitability, and the cross-section of expected stock returns in U.S. and Chinese markets. By replicating the main results in Ball et al. (2016 JFE), we confirm that cash-based operating profitability subsumes the return predictability of accruals and operating profitability in the U.S. market. Extending to the Chinese market, we similarly find that operating profitability and cash-based profitability can both predict returns but in contrast, operating profitability subsumes cash-based profitability.
Keywords: Accruals
Cash-based operating profitability
Operating profitability
Return predictability
Publisher: Elsevier
Journal: Pacific basin finance journal 
ISSN: 0927-538X
DOI: 10.1016/j.pacfin.2020.101336
Rights: © 2020 Elsevier B.V. All rights reserved.
© 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.
The following publication Du, Q., Wang, Y., & Wei, K. C. J. (2020). Does cash-based operating profitability explain the accruals anomaly in China? Pacific-Basin Finance Journal, 61, 101336 is available at https://dx.doi.org/10.1016/j.pacfin.2020.101336.
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