Arab Journal of Administration المجلة العربية للإدارة


This study aims at identify the extent to which income smoothing in companies listed on the Saudi Stock Exchange (Tadawul) and which belong to the sector of industrial investment sector and the agricultural and food industries. The primary objective of this study was to identify the effect of income smoothing on the market returns of these companies, in addition to measuring the effect of company size and type sector on the income smoothing process. The sample of the study comprises (21) Industrial Investment Sector Agriculture & Food Industries Sector listed on the Saudi Stock Exchange (Tadawul) during the period of (2008-2012). Eckel, (1981) model was use to classify the companies into smoothers and non-smoothers. Four measures of Income was used to achieve the objective of the study, which are gross profit, net operating income, income before tax and net income. Were used the average total assets for the expression of the size of the company. Descriptive measures, Pearson Test, T Test and multiple regression. The results showed that most of the Saudi companies that belong to the sectors under study practiced income smoothing appeared in all four measures of income both sectors and in different proportions. It also indicated that there is no significant difference occurred between the type of sector and income smoothing behavior by using different income measures except net operating income as a measure of smooth. Also there is significant difference occurred between the size of smoothing companies and non-smooth companies. Finally, the findings indicated that there is a no significant statistical impact of income smoothing behavior on market return