What question did this study set out to answer?

This paper examines how the smoothing hypothesis influences reported earnings based on different accounting methods.

The Smoothing Hypothesis: An Alternative Test.

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Analyzing how accounting methods affect earnings variability, suggesting smoother reported earnings outcomes.

This paper examines how the smoothing hypothesis influences reported earnings based on different accounting methods.
Analyzing the impact of the cost and equity methods on reported earnings from unconsolidated subsidiaries.
Using the least squares criterion to develop linear relationships between earnings and time for each method.
Calculating the slope coefficient to estimate growth rates in before-tax earnings for each valuation method.
The study reveals that both the cost and equity methods can lead to smoother reported earnings despite differing performance measures.
Estimates of earnings variability show significant differences based on the chosen accounting method.

Barefield et al. (1972) studied this question.

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