This study examines and finds that the persistence of aggregate accruals has declined significantly in recent years. We then investigate sources and equity market consequences of the decline in the persistence of aggregate accruals. We provide evidence that the decline in the persistence of aggregate accruals is concentrated on a decrease in the persistence of aggregate inventory changes. This evidence suggests that improved business practices, such as the wide-spread adoption of efficient inventory management systems, are related to the decline in the persistence of aggregate accruals. We also document that the decrease in the persistence of aggregate accruals has implications for a change in the aggregate earnings-returns relation from negative to positive in recent years.