Development of the Income Smoothing Literature 1893-1998: A Focus on the United States / Edition 1

Development of the Income Smoothing Literature 1893-1998: A Focus on the United States / Edition 1

by Dale A. Buckmaster
     
 

ISBN-10: 0762308044

ISBN-13: 9780762308040

Pub. Date: 09/12/2001

Publisher: Emerald Group Publishing

This volume describes the development of accounting thought during the twentieth century by focusing on a relatively narrow and long-lived issue, income smoothing.

The task begins with the creation and description of three taxonomies of income smoothing literature in order to identify the context and bounds of the preferences and behavior that are to be the

Overview

This volume describes the development of accounting thought during the twentieth century by focusing on a relatively narrow and long-lived issue, income smoothing.

The task begins with the creation and description of three taxonomies of income smoothing literature in order to identify the context and bounds of the preferences and behavior that are to be the subject of the study. Then a chronological review of English-language literature referring to income smoothing behavior is conducted that covers the period, 1893 through 1998. The review starts with literature discussing secret reserves created so that fat years could pay for lean years and moves to income smoothing as a criterion for accounting choice.

This literature on the smoothing criterion provided motivation for some of the earliest modern empirical studies in accounting. Empirical studies of smoothing have continued at a fairly constant rate since 1966 and make up a substantial portion of the literature review. A modification of the conventional smoothing hypothesis is proposed at the conclusion of the narrative that takes into account some relevant variables that tend to be overlooked because of the fragmentation of the literature. An extensive annotated bibliography and other appendices provide important supplements to the narrative.

Product Details

ISBN-13:
9780762308040
Publisher:
Emerald Group Publishing
Publication date:
09/12/2001
Series:
Studies in the Development of Accounting Thought
Pages:
292
Product dimensions:
6.14(w) x 9.21(h) x 0.69(d)

Table of Contents

Editor's Prologueix
1Introduction1
Objectives1
Summary and Role in Earnings Management Research2
Organization of the Book5
Definition of Income Smoothing7
Smoothing Instruments and Tactics9
Smoothing Objects9
Taxonomies10
Taxonomy of Smoothing Tactics12
Taxonomy of Document Objectives17
Taxonomy of Literature Types19
Scope of the Study and Method of Entry Identification20
2Income Smoothing in Accounting and Business Literature Prior to 195423
Overview of Chapter23
Secret Reserves24
LIFO and Other Base Stock Inventory Methods30
Empiricism34
Hepworth (1953)37
Discussion38
3Antecedents of Modern Earnings Management Research: Income Smoothing in Literature, 1954-196541
Overview of Chapter41
Gordon (1964)42
Smoothing as a Criterion for Accounting Choice by Regulators43
Stockholder Satisfaction as the Motivator for Income Smoothing45
Other References to Income Smoothing47
Discussion49
4Early Modern Income Smoothing Research, 1966-198153
Introduction to Chapter53
Evidence from Income Smoothing Studies55
Statistical Properties of Accounting Income, Efficient Markets and Income Smoothing Incentives57
Some Conceptual Difficulties64
Random Effects that Appear as Smoothing Behavior64
Determining a Target Income64
Smoothing Tactics: Long-run and Short-run Smoothing66
Unobservable Smoothing versus Observable Tactics69
Pre-smoothed Income Deviation from Target Income70
Regulatory Smoothing and Smoothing by Convention70
Income Smoothing in Accounting Historical Literature73
Income Smoothing in the Professional Literature and the Popular Press74
Summary and Discussion76
5Income Smoothing in Modern Accounting Literature79
Introduction to Chapter79
Evidence from Income Smoothing Studies79
Analytical Modeling and Income Smoothing Research84
Continuing and Newly Recognized Conceptual Problems86
Target Income86
Cash Flow Effects of Non-regulatory Accounting Smoothing87
Long-run versus Short-term Smoothing88
Easily Detectable versus Difficult to Detect Smoothing Tactics88
Smoothing Behavior May Vary Over Time89
The Big Bath and Income Smoothing89
Regulatory Smoothing90
Smoothing in Professional Literature and the Popular Press93
Income Smoothing in Historical Literature95
Summary97
6Conclusion and Restatement of the Income Smoothing Hypothesis99
Some Definitional and Conceptual Issues100
Asymmetry of Information100
Target Income101
Target Income as a Range102
Expense Preference103
The Big Bath104
Implications for Income Smoothing104
Multi-period Accounting Commitments107
Implications for Future Research108
Notes111
Appendix AChronological Listing of Some Modern Definitions of Smoothing117
Appendix BAnnotated Bibliography of Income Smoothing References: Chronological Listing of Entries123
Appendix CStudies to Identify Smoothing Behavior223
Appendix DOther Empirical Studies Related to Income Smoothing247
Appendix EAn Evaluation of the Use of ABI Inform for an Extensive Literature Review261
Non-Smoothing References Not Included in Annotated Bibliography265
Index269

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