Effect of earnings smoothness on firm performance: a study of Indian National Stock Exchange. (29th July 2021)

• Record Type: Journal Article
• Authors: Munjal, Shikhil; Singh, Gurcharan; Tijjani, Bashir
• Is Part Of: Journal for global business advancement. Volume 14:Number 3(2021)
• Page Start: 335
• Page End: 356
• Publication Date: 2021-07-29
• Subjects: earning quality -- smoothness -- NSE -- National Stock Exchange -- return on asset -- ROA -- Tobin's Q; Business -- Periodicals; International business enterprises -- Periodicals; 650
• Languages: English
• ISSNs: 1746-966X

Abstract

The aim of this study is to empirically examine the impact of earnings smoothness on operational and market performance of Indian National Stock Exchange (NSE) using panel data. The dynamic generalised method of moment is utilised in this study. The study covers a period of seven years (2013-2019) and the sample firms were drawn from companies listed on NSE 500 Index. The results revealed a significant effect of earning smoothing on company's operational as well as market performance. These results are consistent with a number of prior studies which found that both ROA and Tobin's Q affect the earning smoothness. Similarly, firms with non-smooth earnings are significantly affected by only ROA. Findings from this study will enable researchers to understand the role of earnings quality in shaping company decisions, not only in the Indian context, but also for the rest of the world.