The Value Relevance of Earnings and Income Smoothing: Greek Evidence on Causality Effects
AbstractThe present paper examines the existence of causality between income smoothing and value relevance of earnings for a sample of firms listed in the Athens Stock Exchange. Using a switching regression model we find evidence suggesting that the low information content of earnings may be a motive for managers to engage in actions that signal the existence of income smoothing. A potential explanation for our results is that management uses income smoothing in order to maximize its utility rather than to affect investors expectations about the future prospects of the firm in the market.
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Bibliographic InfoArticle provided by European Research Studies Journal in its journal European Research Studies Journal.
Volume (Year): VI (2003)
Issue (Month): 3-4 (July - December)
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Earnings Returns relation; income smoothing; switching regression;
Find related papers by JEL classification:
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
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