Analysis and diagnosis of income smoothing in Spain

B. Gill de Albornoz and Jose Alcarria
Authors registered in the RePEc Author Service: Belen Gill-de-Albornoz ()

European Accounting Review, 2003, vol. 12, issue 3, 443-463

Abstract: This paper examines income smoothing behaviour for a sample of Spanish listed companies over the period 1991-97. Discretionary accruals are used as a measure of managers' accounting discretion. Our results strongly support the income smoothing hypothesis which predicts aggressive (conservative) accounting policies when a firm's current pre-managed performance undershoots (exceeds) target earnings, as proxied by median earnings for the firm's industry. Consistent with DeFond and Park (1997), we also provide some evidence supporting the anticipatory income smoothing hypothesis, whereby current period smoothing behaviour is partly conditioned on expected future performance.

Date: 2003
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Citations: View citations in EconPapers (6)

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DOI: 10.1080/0963818022000001154

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