WHAT EXPLAINS WIDENING PROFITABILITY DISPERSION AROUND THE WORLD?

Makoto Nakano, 誠 中野 and Yasuharu Aoki

Hitotsubashi Journal of commerce and management, 2016, vol. 50, issue 1, 23-46

Abstract: This study explores the fundamentals of profitability dispersion across ten countries between 1982 and 2007. Profitability dispersion level and its time-series behavior vary by year and by country. Both accounting and economic factors cause this phenomenon. Using aggregate data, we report evidence that the dispersion is significantly related to income smoothing, discretion in reported earnings, the presence of small firms, and macro firm performance. The presented results are almost robust to the definition of profitability dispersion and differences of legal system. Our research contributes to the literature on international differences in earnings properties.

Keywords: profitability dispersion; earnings management; small firms (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjcm:v:50:y:2016:i:1:p:23-46

DOI: 10.15057/28214

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