Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/15309
Title: Income smoothing, earnings quality and firm valuation
Authors: Bao, BH
Ba, DH
Keywords: Earnings multiple
Earnings quality
Firm valuation
Income smoothing
Issue Date: 2004
Publisher: Wiley-Blackwell
Source: Journal of business finance and accounting, 2004, v. 31, no. 9-10, p. 1525-1557 How to cite?
Journal: Journal of business finance and accounting 
Abstract: This study argues that lower variability of earnings does not guarantee income smoothers' higher firm values. Instead, smoothers' earnings should be more value-relevant if they are of high quality, i.e., earnings quality should be considered simultaneously. Sample firms are divided into four groups: quality earnings smoothers, quality earnings non-smoothers, nonquality earnings smoothers, and non-quality earnings non-smoothers. Value relevance of reported earnings is then studied using both the levels and the changes approaches with indicator variables. Results show quality earnings smoothers have the highest price-earnings multiple while non-quality nonsmoothers have the lowest price-earnings multiple.
URI: http://hdl.handle.net/10397/15309
ISSN: 0306-686X
DOI: 10.1111/j.0306-686X.2004.00583.x
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