Who, if anyone, reacts to accrual information?

► Most investors ignore the information in accruals information. ► A subset of investors who initiate large trades, however, respond to accruals in the correct direction. ► These investors respond to accruals information only following non-negative earnings surprises. ► Investors initiating very small trades appear to respond to accruals in the wrong direction. ► They are actually reacting to attention grabbing stocks.