Income smoothing from a Census X-12 perspective

Peter A. Silhan

Advances in accounting, 2014, vol. 30, issue 1, 106-115

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.

Keywords: Income smoothing; X-12-ARIMA; Earnings variability; Earnings persistence (search for similar items in EconPapers)
JEL-codes: C87 M41 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:30:y:2014:i:1:p:106-115

DOI: 10.1016/j.adiac.2014.04.004

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