The coefficient on accruals is generally bigger in magnitude than the coefficient on long-term asset accruals (LTAA); this is because LTAA is positively skewed, while ACC is more symmetrically distributed, and hence, less affected by extreme values.
For example, in tests of Model 1, the coefficients on LTAA increase in magnitude from 0.
In the sample of positive discretionary LTAA, coefficients on LTAA across all regressions are significantly negative.
In the positive LTAA sample, where over-investment is more likely, the fourth-quarter coefficient on LTAA (-0.
If underinvestment prevails in this group, more investment should improve future profitability, implying positive coefficients on LTAA.