This paper uses a new approach to examine whether income smoothing garbles earnings information or improves the informativeness of past and current earnings about future earnings and cash flows. We measure income smoothing by the negative correlation of a firm s change in discretionary accruals...

Prior studies have theoretically and empirically documented that incentives to disclose information involve a trade-off between the benefits to the corporation of reducing information asymmetry and the costs of revealing proprietary information. This study investigates the interplay of managers'...