Discretionary Accounting Decisions and Income Normalization

Abstract

The purpose of this paper is to report on another study aimed at determining whether the motive of income smoothing or income normalization can explain management's selection of accounting alternatives.1 Like Dascher and Malcom (see pages 253-59 in this issue), I designed the study to avoid some of the methodological problems discussed by Copeland.2 In particular, this study covers a longer timespan (10 years) and includes the effect on income of more accounting variables than found in the majority of the previous studies reported.3