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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27592
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| Title: | Does Income Smoothing Make Stock Prices More Informative? |
| Authors: | Zarowin, Paul |
| Issue Date: | Jun-2002 |
| Series/Report no.: | Paul Zarowin-03 |
| Abstract: | This paper presents a new approach to studying the effects of earnings
management, by testing whether income smoothing, a particular form of
earnings management, is associated with more informative stock prices.
Stock price informativeness is defined as the amount of information
about future earnings and cash flows reflected in current period stock
returns, and is measured as the coefficient on future earnings (cash
flows) in a regression of current stock return against current and
future earnings (cash flows and accruals). I find that firms with
greater smoothing have more informative stock prices, implying that
managers use income smoothing to reveal their private information about
the firm’s future profitability. |
| URI: | http://hdl.handle.net/2451/27592 |
| Appears in Collections: | Accounting Working Papers
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