Income smoothing and firm value: the moderating role of foreign ownership

Saule Dyussembina, Kunsu Park and Young Mok Choi

Asia-Pacific Journal of Accounting & Economics, 2024, vol. 31, issue 2, 153-175

Abstract: This study examines whether foreign ownership plays a moderating role in the relation between income smoothing and firm value. We first find that income smoothing is negatively related to firm value. We then find that the negative relation between income smoothing and firm value is weaker for firms with high foreign ownership than for those with low foreign ownership. This finding suggests that foreign ownership serves a positive moderating role in the income smoothing-firm value relation. Finally, we further find that the positive moderating effect of foreign ownership on the income smoothing-firm value nexus is stronger for firms that have higher profitability and pay dividends. Overall, our empirical evidence sheds light on the moderating role of foreign ownership in the association between income smoothing and firm value.

Date: 2024
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DOI: 10.1080/16081625.2023.2176329

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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