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The effect of real earnings smoothing on corporate labour investment
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Cao, Zhangfan, Rees, William and Zhang, Zhifang (2023) The effect of real earnings smoothing on corporate labour investment. The British Accounting Review, 55 (6). 101178. doi:10.1016/j.bar.2023.101178 ISSN 0890-8389.
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Official URL: https://doi.org/10.1016/j.bar.2023.101178
Abstract
This study investigates the impact of real earnings smoothing on labour investment efficiency. Our results show that real earnings smoothing is significantly associated with higher labour investment efficiency, supporting the private information signalling view of earnings smoothing. We also fine information asymmetry as a plausible channel through which real earnings smoothing improves labour investment efficiency. Further analyses find that the positive impact of real earnings smoothing on labour investment efficiency is primarily driven by the informational component rather than the garbling component of earnings smoothness, and is more pronounced for financially constrained firms with equity-based financing incentives and loss-making firms. Our paper advances the understanding of corporate labour investment and the benefits of real earnings smoothing.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HF Commerce H Social Sciences > HG Finance |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Capital budget, Turnover (Business), Accounting, Investments, Earnings management | ||||||||
Journal or Publication Title: | The British Accounting Review | ||||||||
Publisher: | Elsevier BV | ||||||||
ISSN: | 0890-8389 | ||||||||
Official Date: | November 2023 | ||||||||
Dates: |
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Volume: | 55 | ||||||||
Number: | 6 | ||||||||
Article Number: | 101178 | ||||||||
DOI: | 10.1016/j.bar.2023.101178 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 9 January 2023 | ||||||||
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