Overview
Details profit and profit theory, and establishes three main reasons for profit smoothing
Explains real earnings management policies such as income smoothing, big bath earnings management, and income minimization and maximization policies
Introduces China as a case study, exploring the last 20 years of capitalism and changes in the international context
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Table of contents (7 chapters)
Keywords
About this book
In a first approximation, profit may seem like a simple and intuitive concept, but the definition is not limited to a single conceptual category. Analysis of the definition and role of profit must be implemented with a study at the corporate level. This book discusses the phenomenon of profit smoothing, implemented by management, which aims to maintain a constant flow of profit over time. On an operational level, the phenomenon of profit smoothing analyses and determines the correlation existing between a shock to a variable at the corporate level and the relationship between this shock and profit.
This book discusses the main reasons, at the strategic level, of the phenomenon of profit smoothing and summarizes this into three groups. Firstly, the functionality of this phenomenon for corporate management is to transmit to the external environment, and especially to external investors, a business reality devoid of crisis and imbalances. Secondly, this initial motivation engages basically the second. In fact, levelling the trend of profit from year to year, top management can reduce the risk perceived from the outsiders and as from the company’s insiders. Thirdly, this justification is related to the stability of the flow of dividends. Profit smoothing places great emphasis on the phenomenon of dividends. It should be note how in fact the profit smoothing is used to keep the expectations of shareholders profit from one period to another.
This book is focused on the profit smoothing and, in particular, how this phenomenon is established in developing-economies like the Chinese one, and will be of interest to academics, researchers, and students of corporate finance.
Authors and Affiliations
About the author
Domitilla Magni is currently a Research Fellow at the Roma Tre University, Italy, after completing her PhD in 2017 from La Sapienza University of Rome, Italy in Management Banking and Commodity Sciences. She has participated as a lecturer at many conferences on financial issues and strategic management alongside authoring many international publications. Her research interests include business strategies, corporate finance, and managerial issues.
Bibliographic Information
Book Title: New Perspectives of Profit Smoothing
Book Subtitle: Empirical Evidence from China
Authors: Domitilla Magni
DOI: https://doi.org/10.1007/978-3-030-21286-5
Publisher: Palgrave Macmillan Cham
eBook Packages: Economics and Finance, Economics and Finance (R0)
Copyright Information: The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2019
Hardcover ISBN: 978-3-030-21285-8Published: 01 August 2019
Softcover ISBN: 978-3-030-21288-9Published: 14 August 2020
eBook ISBN: 978-3-030-21286-5Published: 23 July 2019
Edition Number: 1
Number of Pages: XVI, 250
Number of Illustrations: 1 b/w illustrations
Topics: Corporate Finance, Business Finance, Development Finance