The relationship between income smoothing and the cost of debt: evidence from the United Kingdom and Nigeria

Ahmed Aboud, Baba Haruna and Ahmed Diab

International Journal of Accounting & Information Management, 2023, vol. 31, issue 3, 455-477

Abstract: Purpose - This paper aims to examine the association between income smoothing and the cost of debt in two different countries, namely, the UK and Nigeria. Design/methodology/approach - The authors used a sample from listed firms in the UK and Nigeria during 2000–2019. The study hypotheses are examined by implementing quantitative methods, including panel regression analysis, cross-sectional regression analysis and parametric independent samplest-test. Findings - The results reveal that Nigerian companies have a substantially higher cost of debt and are more active in using income-smoothing practices. However, the relationship between income smoothing and the cost of debt is not found to be statistically significant in both countries. Besides, the results of this study show that financial leverage, profitability, company size and asset turnover are significantly associated with the cost of debt. Originality/value - The study contributes to the existing literature by providing new insights concerning the contrast between developed and developing countries in financial and reporting issues.

Keywords: Income smoothing; Cost of debt; UK; Nigeria; Agency theory; Earnings management (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijaimp:ijaim-09-2022-0204

DOI: 10.1108/IJAIM-09-2022-0204

Access Statistics for this article

International Journal of Accounting & Information Management is currently edited by Dr Xin (Robert) Luo and Professor Han Donker

More articles in International Journal of Accounting & Information Management from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().