The Impact of Smoothing on Firm Value - An Industry Analysis

Detta är en Magister-uppsats från Lunds universitet/Företagsekonomiska institutionen

Författare: Henriette Struck; Sara Fiehn; [2011]

Nyckelord: Management of enterprises; industry analysis; value premium; income smoothing; earnings management; risk management; cash-flow smoothing; Företagsledning; management; Business and Economics;

Sammanfattning: The purpose of this study is to analyze the impact of smoothing on firm value in the US Electricity, Oil & Gas Producers, Pharma & Biotechnology, Retail and Leisure & Tourism Industry. We find that investors value smooth earnings in the Oil & Gas, Electricity & Alternative Energy and Leisure & Tourism Industry. In the Pharma & Biotechnology and Retail industry we do not find smoothing activity to be value relevant. Over the majority of industries we observe time- specific effects. The findings of our empirical analysis show that benefits from smoothing cannot be generalized across industries. Instead the value relevance of smoothing income/earnings has three dimensions which need to be analyzed in order to find meaningful results. This is the firm, industry and time dimension.

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