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Income Smoothing and the Usefulness of Earnings
Unrestricted Use
CC BY
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This resource is a video abstract of a research paper created by Research Square on behalf of its authors. It provides a synopsis that's easy to understand, and can be used to introduce the topics it covers to students, researchers, and the general public. The video's transcript is also provided in full, with a portion provided below for preview:

"A company's economic performance varies over time But a company's executives can use earnings management to reduce the variability of reported earnings - a common measure of economic performance This process, known as “income smoothing,” has been debated by regulators and researchers Some worry that executives may use income smoothing to mask poor economic performance Others argue that income smoothing allows executives to report earnings that better reflect the company’s true ongoing performance A new study examines how income smoothing impacts debt contract design and financial covenant effectiveness to provide evidence on these issues The study finds that debt contracts to borrowers who smooth income are more likely to include an earnings-based debt covenant And income smoothers are less likely to experience a spurious covenant violation, where a debt covenant is violated even though credit risk has not increased These findings suggest that smoothed earnings are more useful in monitor.."

The rest of the transcript, along with a link to the research itself, is available on the resource itself.

Subject:
Accounting
Business and Communication
Material Type:
Diagram/Illustration
Reading
Provider:
Research Square
Provider Set:
Video Bytes
Date Added:
09/20/2019
Introduction to Fiscal Policy
Read the Fine Print
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In this 3 minute video, students are introduced to the concept of fiscal policy which takes place via taxes, spending and borrowing in an effort to ease the boom and bust cycles of the business cycle. This video will aid in the mastery of standard EPF. 5 and 7

Subject:
Economics
Social Science
Material Type:
Lecture
Provider:
Marginal Revolution University
Date Added:
10/31/2018