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Volume : III, Issue : V, June - 2013

INCOME SMOOTHING PRACTICES: AN EMPIRICAL INVESTIGATION OF LISTED FIRMS IN TEHRAN STOCK EXCHANGE (TSE)

KHADIJEH KHODABAKHSHI PARIJAN

Published By : Laxmi Book Publication

Abstract :

The research mainly aims to identify factors influencing income smoothing among companies listed in Tehran stock exchange from 2008 to 2012 and factors influencing income smoothing. From one perspective, related elements of income smoothing; can be categorized as goals and motives, tools, and influencing factors. If income smoothing behaviour be observed in an economic environment, one of the questions raised is what factors can be effective in this phenomenon. This research addresses factors influencing income smoothing among Iranian listed companies in TSE. Although many factors can potentially be effective in this phenomenon, in this study the factors chosen are including: Debt to Equity ratio, Company Profitability ratio, Company Size, Financial leverage ratio. It based on the results of univariate analysis using the Mann-Whitney Test there are differences of Company Size, Profitability, and net profit margin of companies that engage in the practice of income smoothing with no income smoothing practice. On multivariate analysis simultaneously on five independent variables, only company size variables significantly influence income smoothing..

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Cite This Article :

KHADIJEH KHODABAKHSHI PARIJAN, (2013). INCOME SMOOTHING PRACTICES: AN EMPIRICAL INVESTIGATION OF LISTED FIRMS IN TEHRAN STOCK EXCHANGE (TSE). Indian Streams Research Journal, Vol. III, Issue. V, http://oldisrj.lbp.world/UploadedData/2550.pdf

References :

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  2. Anjini Kochar,(1998), “Smoothing Consumption By Smoothing Income: Hours-Of-Work Responses To Idiosyncratic Agricultural Shocks In Rural India”, The Review of Economics and Statistics
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  16. Stefanie Sieber, (2009), “Cyclone damage & agriculture in India-Income Smoothing, Risk Diversi. Cation and Cyclone Damage in India
  17. Ahmed, A., G.J. Lobo and J. Zhou. (2008), “Job security and income smoothing: An empirical test of the Fundenberg and Tirole (1995) model”, Available at SSRN
  18. Anjini Kochar,(1998), “Smoothing Consumption By Smoothing Income: Hours-Of-Work Responses To Idiosyncratic Agricultural Shocks In Rural India”, The Review of Economics and Statistics
  19. Arya, Anil; Glover, Jonathan C. and Sunder, Shyam (2003), “Are unmanaged earnings always better for shareholders?”, Accounting Horizons, supplement
  20. Badri, Ahmad (1999), “Identification of factors affecting income smoothing”, Doctoral Thesis, University of Tehran, Tehran
  21. Bitner, L.N. and Dolan, RC. (1996), “Assessing the relationship between income smoothing and the value of the firm”, Quarterly Journal of Business and Economics, 35 (1).
  22. Beidleman, C.R. (1973), “Income smoothing: The role of management.” The Accounting Review 48(4). Chen, J.Z., L.L. Rees and S. Shivaramakrishnan. (2008), “on the use of accounting vs. real earnings management to meet earnings expectations: A market analysis”. (September). Available at SSRN: .
  23. Copeland, R.M., (1968),”Income Smoothing”, Empirical research in Accounting: selected studies. Copeland,R.M. and Wojdak,R.J.(1969),“Income manipulation and the purchase pooling choice”, Journal Of Accounting Research, Autumn.
  24. Eckel, N, (1981), “the income smoothing hypothesis revisited”, Abacus,17 (1).
  25. Hejazi, R., Ansari, Z., Sarikhani, M., & Ebrahimi, F. (2012). The Impact of Earnings Quality and Income Smoothing on the Performance of Companies Listed in Tehran Stock Exchange. Available at SSRN
  26. Krejcie & Morgan ,(1970), “Determining Sample Size for Research Activities” Educational and Psychological Measurement, 30, 607-610
  27. Imhoff Jr.,E.(1977),“Income smoothing-Acase for doubt”, Accounting Journal,spring,85-100
  28. Kusuma,I.W,(2005),“Do income smoothing practices explain the lower earnings-price ratio of Japanese firms compared to those of the U.S.firms?”,Gadjah Mada International Journal of Business,7(1),69_94
  29. Noravesh, I. and Sepasi, S (2005), “Study of the relation between cultural values and income smoothing in Tehran Stock Exchange”, Iranian Accounting and Auditing Review, 12 (40), 81-96.
  30. Pourheydari, O. and Aflatooni, A (2006), “The investigation of incentives of income smoothing in the Tehran Stock Exchange”, Iranian Accounting and Auditing Review, 13 (44), 55-70.
  31. Stefanie Sieber, (2009), “Cyclone damage & agriculture in India-Income Smoothing, Risk Diversi. Cation and Cyclone Damage in India”
  32. Sujata Kapoor, (2009),“ Impact Of Dividend Policy On Shareholders' Value: A Study Of Indian Firms”, Doctoral Thesis, Jaypee Institute of Information Technology, Noida
  33. Ahmed, A., G.J. Lobo and J. Zhou. (2008), “Job security and income smoothing: An empirical test of the Fundenberg and Tirole (1995) model”, Available at SSRN

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