Konsekwencje Wygładzania zysków dla kształtowania się wartości spółek na GPW
Consequences of earnings smoothing for formation of companies values in the Warsaw Stock Exchange

Summary/Abstract: Purpose – Earnings smoothing can be treated as an example of earnings management. Earnings management in the light of research results concerning mainly the US market has a negative impact on the value of companies that apply this treatment. The aim of the article is to verify the hypothesis about the negative impact of smoothing earnings on the value of companies listed on the emerging market, an example of which is the Warsaw Stock Exchange. Research methodology – In order to determine the relationship between the value of companies and the degree of earnings smoothing a multivariate regression was used in which the parameters were determined on the basis of the least-squares method. which the parameters were determined on the basis of the least-squares method. The dependent variable (company’s value proxy) was the Q-Tobin ratio. The degree of earnings smoothing was determined as the quotient of the standard deviation of the company’s operating earnings (EBIT) to the standard deviation of operating cash flows (OCF). Results – The obtained results indicate that – after taking into account the control variables – the relationship between Q-Tobin ratio and the degree of earnings smoothing is negative: companies that more smooth out earnings, are characterized by a lower Q-Tobin ratio. Originality/value – The presented article may be treated as part of a wider research project on motives and consequences of earnings management in emerging markets. The value of this project lies in the fact that a preliminary attempt to investigate the relationship between earnings smoothing and company’s value was made for companies listed on WSE. An attempt was made to answer the question whether relations observed in mature markets are also taking place on less developed markets, an example of which is the WSE.

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