Paper Information

Journal:   JOURNAL OF ADVANCED RESEARCH IN ACCOUNTING AND AUDITING   2016 , Volume 1 , Number 1; Page(s) 26 To 31.
 
Paper: 

INVESTIGATING THE EFFECT OF PROFIT SMOOTHING ON THE ECONOMIC VALUE ADDED OF COMPANIES LISTED ON TEHRAN STOCK EXCHANGE

 
 
Author(s):  SEDAGHAT SAEID*
 
* COLLEGE OF HUMANITIES, TEHRAN BRANCH, ISLAMIC AZAD UNIVERSITY, TEHRAN, IRAN
 
Abstract: 

Profit smoothing has a clear aim and it is to create the steady growth in profits. The existence of this type of manipulation needs that a company have a lot of profits in order to be supply necessary resources for regulating currents at the time of need. In general, its aim is to reduce the variations of profits and to consider the reported accounting interest profit important. There is a hypothesis that managers seek to smooth profits during all periods in order that the more fixed profit flow with less annual variance results in higher company valuation. In some cases, this issue is suggested that a natural stock market cannot take appropriately the accounting data. Therefore, the present study is to investigate the effect of profit smoothing on the economic value added of companies listed on Tehran Stock Exchange. The population of the study includes all companies listed on Tehran Stock Exchange. The sampling method was simple random sampling. The study was a longitudinal three-year period one started from 2010 to 2013. The results of the research indicate that profit smoothing is effective on the economic value added of companies listed on Tehran Stock Exchange, and economic value added of smoothing companies is significantly less than that of unsmoothing companies.

 
Keyword(s): PROFIT SMOOTHING, ECONOMIC VALUE ADDED, STOCK EXCHANGE
 
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