Earlier in the decade and during prior decades, earnings management was more a game of “smoothing out” the peaks and valleys in a corporation’s income flow in order to reduce the apparent volatility in the corporation’s returns. Thus, managements characteristically attempted to hide “excess earnings” in “rainy day reserves” in order to use such funds later to smooth out undesired declines in the firm’s earnings. (Coffee, 2003a, pp. 22–23)
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© 2008 Springer Science+Business Media, LLC
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Ronen, J., Yaari, V. (2008). Smoothing. In: Earnings Management. Springer Series in Accounting Scholarship, vol 3. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-25771-6_7
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