Faculty Digital Archive

Archive@NYU >
Stern School of Business >
Accounting Working Papers >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/27592

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

Files in This Item:

File Description SizeFormat
SSRN-id315099.pdf171.15 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.

 

The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS