Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7340395 | Advances in Accounting | 2014 | 10 Pages |
Abstract
Corporate income smoothing has been the focus of much attention, yet relatively little is known about the key characteristics of income-smoothing firms. To address this issue, the current study uses quarterly data with Census X-12 analysis in a novel way to identify firms where the degree of random variability in earnings is less than the degree of random variability in sales (EVARÂ <Â SVAR). Prior research views such firms as effective smoothers, since most firms have scale-free variability profiles in the opposite direction (EVARÂ >Â SVAR). Large-sample US results identify these exceptions throughout a broad cross section of firms, but smaller and less profitable firms tended to have a higher incidence rate. Results also indicate that effective smoothers exhibited higher earnings persistence.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Peter A. Silhan,