What question did this study set out to answer?

The research aims to investigate the use of extraordinary revenues and expenses to smooth ordinary income over time.

Classificatory Smoothing of Income with Extraordinary Items.

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This analysis tests the use of extraordinary items to affect ordinary income over time, indicating implications for financial reporting.

The research aims to investigate the use of extraordinary revenues and expenses to smooth ordinary income over time.
Tested the impact of extraordinary items on ordinary income smoothing
Analyzed the role of extraordinary revenues and expenses separately
Reviewed previous literature on income smoothing mechanisms
Extraordinary items can be strategically used to smooth ordinary income
Smoothing is primarily focused on ordinary income per share, not net income
Findings suggest management uses smoothing to influence earnings predictions

Barnea et al. (1976) studied this question.

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