Income Smoothing Practices and Their Impacts on Financial Performance: Evidence from Corporates listed on the PEX

Authors

Ibrahim Mohammad Ateeq, Salsabeel Diab Alkomi

 

Abstract

This study examined income smoothing practices based on the Eckel model (1981) on financial performance, which was applied to 31% of companies listed on the Palestine Stock Exchange from 2017 to 2023. The results showed a significant increase in income smoothing practices by the sample companies’ management to achieve opportunistic goals and serve some categories of investors. Results also showed a statistically weak, mixed in direction, but significant effects of the income smoothing variable on financial performance indicators. A weak positive effect of governance on financial performance indicators was also observed, while the ownership structure had a weak negative effect on financial performance. The key recommendations for the company›s management include promptly adhering to principles of governance in its conduct, ensuring a balanced consideration of stakeholders’ interests, and complying with international financial reporting standards in the disclosure of its performance. The auditor may be recommended to exercise further due professional care in his audit work leading to fair opinion on the corporate financial reports in order to maintain their fair presentation from stakeholders’ point view.

DOI: 10.51958/AAUJBL2026V10I2P2