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What are the Jones and modified Jones model of aggregate accruals in earnings management?

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The original Jones model of non-discretionary accruals was developed by J. Jones in a 1991 paper in which she asserted that firms under the scope for import relief would engage in income-reducing earnings management.

It is a cross-sectional regression model:
Non-discretionary accruals = OLScoeff(1)(1/Assets) + OLScoeff(2)(chg in Rev) + OLScoeff(3)(gross PPE) + error of estimates

This original model has been refined many times to include the modified-Jones model which tweaks the second factor changing it from OLScoeff(2)(chg in Rev - chg in Rcvbls)

Both are among the several regression tests for earnings management but the limitation of all regression tests of EM is that (1) the power of the tests are generally low (partially explain variation if and when detected), and (2) they are all ex post measures (lagging).

Additional models include the industry model and the Healy model.
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