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Author: Vasiliki Athanasakou
Publisher:
ISBN:
Category : Financial statements
Languages : en
Pages : 50
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Book Description
Author: Vasiliki Athanasakou
Publisher:
ISBN:
Category : Financial statements
Languages : en
Pages : 50
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Book Description
Author: Vasiliki E. Athanasakou
Publisher:
ISBN:
Category :
Languages : en
Pages : 54
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Book Description
Financial Reporting Standard No 3 (FRS3) regulated the reporting of financial performance by UK firms from 1993 until the adoption of International Financial Reporting Standards in 2005. FRS3 outlawed extraordinary items, but allowed a clearer distinction between recurring and transitory income by giving firms discretion over the classifications of unusual (i.e. exceptional) items and the option to disclose alternative EPS. Through these provisions FRS3 increased the scope for classificatory choices as a means to highlight persistent profitability. We examine the impact of FRS3 on classificatory smoothing by UK firms and document a significant rise in this practice post-FRS3. We find that this increase is due mainly to deviations of net income from expected earnings inducing a significantly higher level of classificatory smoothing post-FRS3. Additional analysis shows that earnings are substantially more persistent at the pre-exceptional level post-FRS3. Overall, our results suggest greater use of classificatory choices to highlight sustainable profitability after the change in performance reporting regime.
Author: Dale Buckmaster
Publisher: Elsevier
ISBN: 9780762308040
Category : Business & Economics
Languages : en
Pages : 296
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Book Description
This volume describes the development of accounting thought during the 20th century by focusing on a relatively narrow and long-lived issue, income smoothing. A chronological review of English-language literature referring to income smoothing behaviour is conducted that covers 1893 to 1998.
Author: Karuppiah S. Rajendran
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 240
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Book Description
Author: Hyunghwan Joo
Publisher:
ISBN:
Category : Income accounting
Languages : en
Pages : 176
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Book Description
This thesis adopts an informational perspective to explain why managers with private information engage in income smoothing and to provide new insights into income smoothing. In particular, this study extends the existing income smoothing literature by highlighting informational properties of income smoothing. Using comparative statics, this thesis also investigates the effect of a firm's underlying characteristics on the reporting strategy of the manager and develops testable implications of the model. A two-period agency model is developed in which initially, managerial ability is unknown to both shareholders and the manager but is known solely to the manager at the end of the first period. The implications of this model are manifold. First, in contrast to the traditional view, income smoothing serves a beneficial role by providing managers with a means to reveal their private information. Smoothed income has incremental information content over non-smoothed income given that smoothed income reveals the manager's private information about his ability (expected future cash flows). Income smoothing thus increases the informativeness of earnings; it represents an information transmission mechanism through which information about managerial ability (expected future cash flows) is channeled to the shareholders. Second, while all types of managers engage in income smoothing, the extent to which a manager smooths reported income varies, depending upon his expectation about a firm's future cash flows. This contrasts with the casual empiricism that only bad (low-quality) managers (firms) smooth their firm's income. The incentives for smoothing further depend upon the manager's ability, realized cash flows, the manager's attitude toward risk, intertemporal volatility of firm cash flows, and the risk attached to the firm's assets-in-place. Finally, a compensation contract based on accrual accounting Pareto-dominates a cash-basis contract. The contract based on the accrual accounting system provides for better risk sharing.
Author: Jonathan Morduch
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 48
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Author: Eugene A. Imhoff
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Eugene A. Imhoff
Publisher:
ISBN:
Category : Income
Languages : en
Pages : 16
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Book Description
Author: Susan Martincich
Publisher:
ISBN:
Category : Income accounting
Languages : en
Pages : 138
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Book Description
Author: Zheng Xie
Publisher:
ISBN:
Category :
Languages : en
Pages : 138
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Book Description
