چکیده:
This paper examines the relationship between income smoothing practices and firms value in Iran. This research also studies the effect of the firms’ size on the tendency to smooth income. The sample comprises 200 companies listed in the Tehran Stock Exchange within the period of 1999-2005. The "coefficient of variation method" introduced by Eckel (1981) has been modified to determine income smoothing practices. The result indicates that income smoothing practices is was present although its percentage is low. The univariate test has found that smaller firms have greater tendency to smooth income rather than larger firms. Then, an Ordinary Least Square (OLS) regression was conducted on a modified income statement model. The heteroscedasticity problem detected by a diagnostic test was encountered by (1) deflating the variable by total sales and (2) using White's heteroscedasticity-adjusted standard errors. The consistent results obtained signify that the valuation of firms concerns more on the magnitude of earnings rather than earnings stream.
خلاصه ماشینی:
"Previous studies have investigated income smoothing instruments such as dividend income, changes in accounting policies, pension costs, extraordinary items, investment tax credit, depreciation and fixed charges, discretionary accounting decisions and many other possible income smoothing tools, (Gordon, Horwitz and Meyers, 1996; Dopuch and Drake, 1991; Archibald, 1967; Cushing, 1999; Dascher and Malcom, 2004; Barefield and Comiskey, 2001; Beidleman, 1993; Barnea, Ronen and Sadan, 1995; and Ronen and Sadan, 2005 and Brayshaw and Eldin, 2006).
This method has been used by many previous studies in determining the presence of income smoothing, (Albrecht and Richardson, 1990; Ashari, Koh, Tan and Wong, 1994; Booth, Kallunki, and Martikainen, 1995; Michelson, Jordan-Wagner, and Wootton, 2000 and Michelson, Jordan-Wagner, and Wootton, 2005).
Although the efficient market theory claimed that accountant would not be successful in deceiving the market using accounting techniques and transaction, however, previous researchers have come out with different arguments on how income smoothing practices can give positive implication on firm value, (Barnea, Ronen and Sadan, 1995; Ronen and Sadan, 2005; Zhemin and Williams, 1994; Trueman and Titman, 2004;).
The alternate hypothesis of this study can be stated as follows:- HA2: Income smoothing practices are positively associated with the firm’s value To test the hypothesis, an ordinary least square (OLS) regression was conducted on the following model.
The test statistic was performed by regressing the square of the residual x t2 as the dependent variable on the predictive values, MVEjt. Symbolically, εˆji2 = β0 + β1 MVEˆ ji + u ji Table 2: Ordinary Least Square Regression Result PANEL A: BASIC MODEL MVEjt = b0 + b1NIjt + b2SMOOTHERjt + ejt Constant Net Income Dichotomous Predicted Sign x + - Coefficient 87843."