Earnings smoothing information as signaling or garbling: a literature review
Earnings smoothing, which refers to the action of managers managing earnings to reduce fluctuations of reported earnings, is a special type of earnings management because while earnings smoothing may be used to distort shareholders and creditors’ view of corporate actual performance, it may also ser...
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| Format: | Article |
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Macrothink Institute
2018
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| _version_ | 1796864317394518016 |
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| author | Shabani, Nor Afifah Sofian, Saudah |
| author_facet | Shabani, Nor Afifah Sofian, Saudah |
| author_sort | Shabani, Nor Afifah |
| collection | ePrints |
| description | Earnings smoothing, which refers to the action of managers managing earnings to reduce fluctuations of reported earnings, is a special type of earnings management because while earnings smoothing may be used to distort shareholders and creditors’ view of corporate actual performance, it may also serve as a tool to communicate corporate private information of future earnings to the aforementioned stakeholders. Hence, it comes to no surprise when prior literatures reveal that the studies on the role of earnings smoothing are divided into two streams: as information signaling and information garbling. This paper aims to review prior literatures, specifically on the role of earnings smoothing either as information signaling or garbling based on four themes: firm value, financing need, compensation contract and outsiders’ intervention. This paper reviews journal articles gathered from Web of Science database. Based on the shortcomings of prior literatures, this paper highlights avenue for future research. |
| first_indexed | 2024-03-05T20:40:03Z |
| format | Article |
| id | utm.eprints-86810 |
| institution | Universiti Teknologi Malaysia - ePrints |
| last_indexed | 2024-03-05T20:40:03Z |
| publishDate | 2018 |
| publisher | Macrothink Institute |
| record_format | dspace |
| spelling | utm.eprints-868102020-09-30T09:08:31Z http://eprints.utm.my/86810/ Earnings smoothing information as signaling or garbling: a literature review Shabani, Nor Afifah Sofian, Saudah HF5601 Accounting Earnings smoothing, which refers to the action of managers managing earnings to reduce fluctuations of reported earnings, is a special type of earnings management because while earnings smoothing may be used to distort shareholders and creditors’ view of corporate actual performance, it may also serve as a tool to communicate corporate private information of future earnings to the aforementioned stakeholders. Hence, it comes to no surprise when prior literatures reveal that the studies on the role of earnings smoothing are divided into two streams: as information signaling and information garbling. This paper aims to review prior literatures, specifically on the role of earnings smoothing either as information signaling or garbling based on four themes: firm value, financing need, compensation contract and outsiders’ intervention. This paper reviews journal articles gathered from Web of Science database. Based on the shortcomings of prior literatures, this paper highlights avenue for future research. Macrothink Institute 2018 Article PeerReviewed Shabani, Nor Afifah and Sofian, Saudah (2018) Earnings smoothing information as signaling or garbling: a literature review. Asian Journal of Finance & Accounting, 10 (1). pp. 131-141. ISSN 1946-052X http://dx.doi.org/10.5296/ajfa.v10i1.12768 DOI:10.5296/ajfa.v10i1.12768 |
| spellingShingle | HF5601 Accounting Shabani, Nor Afifah Sofian, Saudah Earnings smoothing information as signaling or garbling: a literature review |
| title | Earnings smoothing information as signaling or garbling: a literature review |
| title_full | Earnings smoothing information as signaling or garbling: a literature review |
| title_fullStr | Earnings smoothing information as signaling or garbling: a literature review |
| title_full_unstemmed | Earnings smoothing information as signaling or garbling: a literature review |
| title_short | Earnings smoothing information as signaling or garbling: a literature review |
| title_sort | earnings smoothing information as signaling or garbling a literature review |
| topic | HF5601 Accounting |
| work_keys_str_mv | AT shabaninorafifah earningssmoothinginformationassignalingorgarblingaliteraturereview AT sofiansaudah earningssmoothinginformationassignalingorgarblingaliteraturereview |