A Theory of Income and Dividend Smoothing Based on Incumbency Rents

Jean Tirole and Drew Fudenberg

Scholarly Articles from Harvard University Department of Economics

Abstract: "Income smoothing" is the process of manipulating the time profile of earnings or earnings reports to make the reported income stream less variable. This paper builds a theory of income smoothing based on the managers' concern about keeping their position or avoiding interference, and on the idea that current performance receives more weight than past performance when one is assessing the future. When investment is added to the model, so that income reports and dividends can be set independently, we find that both dividends and income reports may be smoothed and that dividends may convey information not present in the income report.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (226)

Published in Journal of Political Economy

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/3160494/fudenberg_theoryofincome.pdf (application/pdf)

Related works:
Journal Article: A Theory of Income and Dividend Smoothing Based on Incumbency Rents (1995)
Working Paper: A Theory of Income and Dividend Smoothing Based on Incumbency Rents (1994)
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:hrv:faseco:3160494

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().