The Smoothing of Income Numbers: Some Empirical Evidence on Systematic Differences Between Core and Periphery Industrial Sectors

This study tests the effects of the dual economy on income smoothing behavior. It is hypothesized that a higher degree of smoothing of income numbers will be exhibited by firms in the periphery sector than by firms in the core sector as a reaction to different opportunity structures and experiences. The results indicate that a majority of firms may be resorting to income smoothing. A higher number is included among firms in the periphery sector.