Means and Motivations Influencing Income Smoothing Policy "An Empirical Study in the Jordanian Manufacturing Firms Listed on the Amman Stock Exchange"

Abstract

This study aims at achieving two basic objectives. The first objective is to discover the extent of income smoothing phenomenon exists in the Jordanian manufacturing corporations under three concepts of income: net operating profit, net income before taxes and net income ( after taxes ). The second objective is to investigate the influences or directives (motivations) of management behavior towards income smoothing. In order to achieve these two goals the Jordanian corporations in the manufacturing sector are chosen as a society of the study. However, this society is represented by a sample consisting of 53 manufacturing corporations for which financial data are available for eight years (1996-2003). In the light of these data, 11 hypotheses related to size (absolute values ) and 13 hypotheses related to financial ratios ( relationships between variables ) are tested. The test of the hypotheses indicates the existence of significant statistical differences between the smoothers and nonsmoother in case of very few financial ratios. As far as the size hypotheses are concerned there aren't any significant statistical differences.