Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/51920

Income Smoothing as Rational Equilibrium Behavior? A Second Look

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dc.contributor.author Hemmer, Thomas
dc.date.accessioned 2017-12-21T21:04:12Z
dc.date.available 2017-12-21T21:04:12Z
dc.date.issued 2017-08-17
dc.identifier.uri http://hdl.handle.net/10125/51920
dc.description.abstract In this paper I revisit the issue of real income smoothing in the setting used by Lambert (1984). I demonstrate that the particular effect identified in his paper is actually an error: under his assumptions there is no input driven equilibrium income smoothing of the type he suggests. There are, however, several other drivers of equilibrium behavior ignored in that paper. In this paper I identify those and for the particular model structure show that when all effects are considered together there is little support for the suggestion that second-best earnings generally is being smoothed through the equilibrium behavior.
dc.subject Agency Theory
dc.subject Multi-Period Contracts
dc.subject Income Smoothing
dc.title Income Smoothing as Rational Equilibrium Behavior? A Second Look
Appears in Collections: 11 Financial: Financial Reporting Quality / Credit Ratings / Earnings Smoothing / Earnings Comparability (FAR3)


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