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Income smoothing from a Census X-12 perspective

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  • Silhan, Peter A.

Abstract

Corporate income smoothing has been the focus of much attention, yet relatively little is known about the key characteristics of income-smoothing firms. To address this issue, the current study uses quarterly data with Census X-12 analysis in a novel way to identify firms where the degree of random variability in earnings is less than the degree of random variability in sales (EVARSVAR). Large-sample US results identify these exceptions throughout a broad cross section of firms, but smaller and less profitable firms tended to have a higher incidence rate. Results also indicate that effective smoothers exhibited higher earnings persistence.

Suggested Citation

  • Silhan, Peter A., 2014. "Income smoothing from a Census X-12 perspective," Advances in accounting, Elsevier, vol. 30(1), pages 106-115.
    • Handle: RePEc:eee:advacc:v:30:y:2014:i:1:p:106-115
    DOI: 10.1016/j.adiac.2014.04.004
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    More about this item

    Keywords

    Income smoothing; X-12-ARIMA; Earnings variability; Earnings persistence;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software

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