Srinidhi, Bin; Ronen, Joshua; Maindiratta, Ajay - In: Review of Quantitative Finance and Accounting 17 (2001) 3, pp. 283-300
We show income smoothing results as a rational equilibrium behavior in a setting where the manager has superior foresight about the firm's prospects but faces inferior capital access relative to the owner. Under a legal structure that makes forecast-based compensation impractical and an...