Income smoothing in banks and insurance companies and its impact on earnings per share – evidence from Jordan
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Received October 24, 2019;Accepted November 26, 2019;Published December 13, 2019
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Author(s)Link to ORCID Index: https://orcid.org/0000-0001-6184-693X
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DOIhttp://dx.doi.org/10.21511/bbs.14(4).2019.12
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Article InfoVolume 14 2019, Issue #4, pp. 126-132
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This study aims to determine the existence of practices of income smoothing in banks and insurance companies in Jordan. Also, it focuses the to determining the impact of the income smoothing on earning per share (EPS). The study covered all the companies in the study population, which are 38 companies – 15 banks and 23 insurance companies listed on the Amman Stock Exchange (ASE). The results show that income smoothing is practiced by Jordanian banks and insurance companies. The number (and percentage) of insurance companies that practiced income smoothing is greater than the number of banks: 34.8% of insurance companies and 20% of banks practiced income smoothing. The results also clearly indicate that financial institutions, which practice smoothing, have a higher EPS compared to those that do not practice income smoothing; this also indicates that the most important goal of using income smoothing is to maintain a positive earnings level.
- Keywords
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JEL Classification (Paper profile tab)G21, G22, M41
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References18
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Tables6
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Figures0
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- Table 1. Study sample
- Table 2. Normal distribution test
- Table 3. Income smoothing
- Table 4. Income smoothing by industry type
- Table 5. Descriptive statistics
- Table 6. Test results (T) of comparing average EPS in the smoothing and non-smoothing companies
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Banks and Bank Systems Volume 13, 2018 Issue #1 pp. 11-21 Views: 2868 Downloads: 403 TO CITE АНОТАЦІЯThe facilitation of economic transactions and friendly investor environment is undertaken through effective performance of financial systems. Mobilization of savings and funding the profitable business opportunities are essential in improving the efficiency of intermediation. The study aims to evaluate the effects of nationalization and privatization on Indian banks. Various factors have been considered to examine the effects of privatization and nationalization, including sources of public sector inefficiency, measures of firm performance, econometric issues, and the mode of privatization. The data was collected for the period of 1998 to 2016 from Indian banks. Data Envelopment Analysis (DEA) was used to evaluate the financial reports of the banks selected to evaluate the efficiency of input and output variables. Positive results were observed, concerning the efficiency and profitability of banking industry after banks’ privatization. Performance of private banks has been observed effective and efficient as compared to the public sector banks. Privatization of banks must be increased and maintained to sustain the efficiency of the banks and implement strategies to maintain the assets. Future studies may recruit more appropriate sample size to evaluate the privatization and nationalization effects of Indian banking industry. Greater number of banks will provide more precise results, using data envelopment analysis.
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The study recommends to disseminate knowledge on the advantages of implementing of ERP system in Jordanian banks and to develop the IT department efficiency. Moreover, it will be worthwhile to examine the effect of ERP systems by utilizing financial and non-financial measurements. -
Internal audit and financial performance of Yemeni commercial banks: Empirical evidence
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