In the economic environment, resource scarcity and high competitiveness, information asymmetry is one of the main problems in decision making. In order to reduce this informational asymmetry, accounting has a fundamental role, but the contribution of the financial statements is associated with the quality of the accounting information, especially the quality of the reported profits. There are incentives for managers to manage earnings, especially in the form of discretionary accruals. Among the earnings management the income smoothing, also known as earnings smoothing stands out. Smoothing practices are associated with the objectives of reducing the volatility of profits, however, there is no consensus on the effects of these practices, if they generate an increase or a reduction in the quality of accounting information. To better analyze this problem, this research project presents some research hypotheses that aim to better understand the measurement, in the form of the improvement of identification of income smoothing metrics, its relation with the quality of the accounting information and the incentives associated with the firms, looking for a higher or lower level of smoothing. This proposal seeks the application of regression models with panel data of North American firms, in an environment with high number of firms and variability of incentives, and Brazilian firms, with recent changes in accounting standards and few incentives for information quality.
News published in Agência FAPESP Newsletter about the scholarship: