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Investigating income smoothing: Empirical evidence from Vietnam's listed companies

Author

Listed:
  • Phung Anh Thu

    (Nguyen Tat Thanh University, Vietnam)

  • Nguyen Vinh Khuong

    (University of Economics and Law-Vietnam National University HCMC, Vietnam)

Abstract

Income smoothing is a dimension of the accounts manipulation theme that has been attracting great attention in the accounting literature. A goal of manipulation is widely ascribed to managers who wants income smoothing. The author has tried to investigate income smoothing at listed companies on the Stock Exchange. For this purpose, we chose a stratified random sample of 285 companies from formula listed companies on Vietnam Stock Exchange. We carried the mechanism for smooth and non-smoothing companies Eckel model (coefficient of variation of the distribution of profits to sales). We have compared 111 smoothing companies and 174 non-smoothing companies. The study results suggest that the Eckel index is suitable for the Vietnam stock market and shows a slight increase compared to the previous research.

Suggested Citation

  • Phung Anh Thu & Nguyen Vinh Khuong, 2017. "Investigating income smoothing: Empirical evidence from Vietnam's listed companies," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 7(2), pages 82-95.
    • Handle: RePEc:bjw:econen:v:7:y:2017:i:2:p:82-95
    DOI: 10.46223/HCMCOUJS.econ.en.7.2.188.2017
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    References listed on IDEAS

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    3. Ben-Hsien Bao & Da-Hsien Bao, 2004. "Income Smoothing, Earnings Quality and Firm Valuation," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(9-10), pages 1525-1557.
    4. Michael Kirschenheiter & Nahum D. Melumad, 2002. "Can “Big Bath” and Earnings Smoothing Co‐exist as Equilibrium Financial Reporting Strategies?," Journal of Accounting Research, Wiley Blackwell, vol. 40(3), pages 761-796, June.
    5. DeFond, Mark L. & Park, Chul W., 1997. "Smoothing income in anticipation of future earnings," Journal of Accounting and Economics, Elsevier, vol. 23(2), pages 115-139, July.
    6. Hervé Stolowy & Gaétan Breton, 2004. "Accounts Manipulation: A Literature Review and Proposed Conceptual Framework," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 3(1), pages 5-92, January.
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