Managers use smooth earnings patterns to communicate their firm's superior earnings prospects to investors. These managers require a knowledge of future earnings (or foresight) in order to determine the level of smoothing in each financial period. However, with discretion in GAAP, low foresight...

This study investigates whether information about future earnings (i.e. foresight) affects a manager's accrual choices in income smoothing. Accruals can be employed to set aside current earnings for future use (flexibility effect). However, the reversal of accruals can lead to more variable...

Managers use smooth earnings patterns to communicate their firm's superior earnings prospects to investors. These managers require a knowledge of future earnings (or foresight) in order to determine the level of smoothing in each financial period. However, with discretion in GAAP, low foresight...