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Empirical Analysis of Profit Smoothing

  • Domitilla MagniEmail author
Chapter

Abstract

The study that is addressed in the following chapters has the purpose of understanding, through empirical analysis, the profit-smoothing phenomenon. The dataset was made using the financial statement information of n° 3304 companies listed in Shanghai Stock and Shenzhen Stock from 2003 to 2016.

Though it is a quantitative method, the research proposed the following prepositions. Firstly, managers will aim to maximize utility. Secondly, utility increases with job security, level of manager’s income, and firm size. Thirdly, the satisfaction of stakeholders’ motive of increasing income determines job security. Fourthly, stakeholders’ satisfaction depends on increases with the average rate of growth in the firms’ income and the stability of its income. It follows therefore that if the assumptions above are justified, management within the latitude provided by accounting rules will smoothen reported income as well as the rate of growth in income.

Keywords

Empirical studies Analyze Stock exchange Shanghai Shenzhen Stock Quantitative analysis Data sample Profit smoothing 

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Roma Tre UniversityRomaItaly

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