Do artificial income smoothing and real income smoothing contribute to firm value equivalently?

Journal of Banking and Finance

Volumn 33, Issue 2, 2009, Pages 224-233

  Huang, Pinghsun ^a   Zhang, Yan ^b   Deis, Donald R ^c   Moffitt, Jacquelyn S ^d  

^a NATIONAL CHENG KUNG UNIVERSITY   (Taiwan)

^b BINGHAMTON UNIVERSITY   (United States)

^c TEXAS A AND M UNIVERSITY CORPUS CHRISTI   (United States)

^d LOUISIANA STATE UNIVERSITY   (United States)

Author keywords

Abnormal accruals; Corporate governance; Derivatives; Income smoothing

Indexed keywords

EID: 56549130478     PISSN: 03784266     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jbankfin.2008.07.012     Document Type: Article

References (30)

1. Aboody D., Hughes J., and Liu J. Earnings quality, insider trading, and cost of capital. Journal of Accounting Research 43 (2005) 651-673
2. Allayannis G., and Weston J.P. The use of foreign currency derivatives and firm market value. Review of Financial Studies 14 (2001) 243-276
3. Asdrubali P., and Kim S. On the empirics of international smoothing. Journal of Banking and Finance 32 (2008) 374-381
4. Barton J. Does the use of financial derivatives affect earnings management decisions?. The Accounting Review 76 (2001) 1-26
5. Burns N., and Kedia S. Executive option exercises and financial misreporting. Journal of Banking and Finance 32 (2008) 845-857
6. Chan K., Chan L., Jegadeesh N., and Lakonishok J. Earnings quality and stock returns. Journal of Business 79 (2006) 1041-1082
7. DaDalt P., Gay G.D., and Nam J. Asymmetric information and corporate derivatives use. Journal of Futures Markets 22 (2002) 241-267
8. Davidson III W.N., Jiraporn P., and DaDalt P. Causes and consequences of audit shopping: an analysis of auditor opinions, earnings management, and auditor changes. Quarterly Journal of Business and Economics 45 (2006) 69-87
9. DeFond M.L., and Park C.W. Smoothing income in anticipation of future earnings. Journal of Accounting and Economics 23 (1997) 115-139
10. DeMarzo P., and Duffie D. Corporate incentives for hedging and hedge accounting. Review of Financial Studies 8 (1995) 743-771
11. Fonseca A.R., and González F. Cross-country determinants of bank income smoothing by managing loan-loss provisions. Journal of Banking and Finance 32 (2008) 217-228
12. Francis J., LaFond R., Olsson P., and Schipper K. The market pricing of accruals quality. Journal of Accounting and Economics 39 (2005) 295-327
13. Froot K., Scharfstein D., and Stein J. Risk management: Coordinating corporate investment and financing policies. Journal of Finance 48 (1993) 1629-1658
14. Fudenberg D., and Tirole J. A theory of income and dividend smoothing based on incumbency rents. Journal of Political Economy 103 (1995) 75-93
15. Goel A., and Thakor A. Why do firms smooth earnings?. Journal of Business 76 (2003) 151-192
16. Huang P., Ryan H., and Wiggins R. The influence of firm- and CEO-specific characteristics on the use of nonlinear derivative instruments. Journal of Financial Research 30 (2007) 415-436
17. Huang, P., Louwers, T., Moffitt, J., Zhang, Y., 2008. Ethical management, corporate governance, and abnormal accruals. Journal of Business Ethics, Corrected Proof, Available online 11 December, 2007.
18. Jin Y., and Jorion P. Firm value and hedging: Evidence from US oil and gas producers. Journal of Finance 61 (2006) 893-919
19. Jiraporn, P., Kim, Y.S., Mathur, I., 2008. Does corporate diversification exacerbate or mitigate earnings management? An empirical analysis. International Review of Financial Analysis, Corrected Proof, Available online 13 October, 2007.
20. Kao, J.L., Wu, D., Yang, Z., 2008. Regulations, earnings management, and post-IPO performance: The Chinese evidence. Journal of Banking and Finance, Corrected Proof, Available online 8 December, 2007.
21. Klein A. Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics 33 (2002) 375-400
22. Kothari S.P., Leone A., and Wasley C. Performance matched discretionary accrual measures. Journal of Accounting and Economics 39 (2005) 163-197
23. Petersen M.A., and Thiagarajan S.R. Risk measurement and hedging: with and without derivatives. Financial Management 29 (2000) 5-30
24. Sloan R. Do stock prices fully reflect information in accruals and cash flows about future earnings?. The Accounting Review 71 (1996) 289-315
25. Smith C., and Stulz R. The determinants of hedging policies. Journal of Financial and Quantitative Analysis 20 (1985) 391-405
26. Trueman B., and Titman S. An explanation of accounting income smoothing. Journal of Accounting Research 26 (1988) 127-139
27. Wu, J., Zhang, L., Zhang, X.F., 2007. The accrual anomaly: exploring the optimal investment hypothesis. Working paper, NBER.
28. Xie B., Davidson W.N., and DaDalt P.J. Earnings management and corporate governance: the roles of the board and the audit committee. Journal of Corporate Finance 9 (2003) 295-316
29. Zhang X.F. Accruals, investment, and accrual anomaly. The Accounting Review 82 (2007) 1333-1363
30. Zhang Y., Zhou J., and Zhou N. Audit committee quality, auditor independence, and internal control weaknesses. Journal of Accounting and Public Policy 26 (2007) 300-327