University of Oulu, and University of Turku. This paper was previously titled “Impairment Write-offs, Discretionary Accruals, and Earnings Persistence. ” Impairment Write-Offs and the Pricing of Accruals Sloan (1996) is the first to document the accruals anomaly, the negative relation between accruals and subsequent stock returns. In this paper I investigate the effects of the recent and prominent adoption of fair-value accounting on the market valuation of accruals. Using a sample of firm-years from 2003 to 2005, I find that investors rationally price different earnings components when setting prices. Further analysis confirms that there are no significant differences in future returns between impairment write-off and control sample firms. These results are inconsistent with the earnings fixation hypothesis proposed by Sloan (1996). I conjecture that recent adoption of fairvalue accounting does not contribute to the accruals anomaly. JEL classification: G10, M
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