Question 5

5. When a company's balance sheet indicates accrual levels higher than expected, it can indicate that the company has lower quality of earnings. In the Excel spreadsheet "SmallBeatSample for students" the amount of the company's discretionary accruals is provided in the column J labeled "DA." A. For the 14,095 quarters of information provided in "Full Data" tab, we compared the discretionary accruals of the 558 quarters suspected of earnings manipulation compared to other 13,537 quarters that do not seem to have manipulated earnings (at least using this pattern). Here is the statistical output from that t-test. What conclusion can you draw from results of the t-test comparing the discretionary accruals of the Suspect firms and the nonsuspect firms