Income smoothing from a Census X-12 perspective

Research output: Contribution to journalArticlepeer-review


Corporate income smoothing has been the focus of much attention, yet relatively little is known about the key characteristics of income-smoothing firms. To address this issue, the current study uses quarterly data with Census X-12 analysis in a novel way to identify firms where the degree of random variability in earnings is less than the degree of random variability in sales (EVAR. <. SVAR). Prior research views such firms as effective smoothers, since most firms have scale-free variability profiles in the opposite direction (EVAR. >. SVAR). Large-sample US results identify these exceptions throughout a broad cross section of firms, but smaller and less profitable firms tended to have a higher incidence rate. Results also indicate that effective smoothers exhibited higher earnings persistence.

Original languageEnglish (US)
Pages (from-to)106-115
Number of pages10
JournalAdvances in Accounting
Issue number1
StatePublished - Jun 2014


  • Earnings persistence
  • Earnings variability
  • Income smoothing
  • X-12-ARIMA

ASJC Scopus subject areas

  • Accounting
  • Finance


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