Smoothing income in anticipation of future earnings

• 成果类型: Article
• 署名作者: DeFond, ML; Park, CW
• 署名单位: University of Southern California
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/S0165-4101(97)00004-9
• 发表日期: 1997
• 关键词: CEO TURNOVER; management

摘要

Recent theory argues that concern about job security creates an incentive for managers to smooth earnings in consideration of both current and future relative performance. We find support for this theory. Our evidence suggests that when current earnings are 'poor' and expected future earnings are 'good', managers 'borrow' earnings from the future for use in the current period. Conversely, when current earnings are 'good' and expected future earnings are 'poor' managers 'save' current earnings for possible use in the future. However, sensitivity analysis indicates that we cannot rule out selection bias as a potential alternative explanation for our findings.