Omid Faraji - Faculty of Management and Accounting, Farabi Campus, University of Tehran, Qom, Iran
Mohammad Reza Fathi - Faculty of Management and Accounting, Farabi Campus, University of Tehran, Qom, Iran.
Sahar Motahari Kia - The University of Shahab Danesh, Qom, Iran
Fatemeh Younesi Motie - Faculty of Management and Accounting, University of Qom, Qom, Iran
Seyed Hasan Masoudi Alavi - Faculty of Management and Accounting, Farabi Campus, University of Tehran, Qom, Iran

Managers engage in income smoothing either to communicate private information about future earnings to investors (informativeness hypothesis) or to distort financial performance for opportunistic purposes (opportunism hypothesis). Business cycles and the monitoring role of institutional ownership may affect the earnings informativeness of income smoothing. The purpose of this research is to examine the effect of business cycles and institutional ownership on the earnings informativeness of income smoothing. ۱۴۰ firms listed on the Tehran Stock Exchange are selected as the sample over the period ۲۰۱۰-۲۰۱۶. The results showed that, during recession, income smoothing does not effectively communicate information about future earnings and thus earnings are less informative. Moreover, higher levels of institutional ownership are associated with a decrease in their monitoring role and decrease in the earnings informativeness of income smoothing. Finally, the results suggested that the relationship between institutional ownership and the earnings informativeness of income smoothing is not significantly affected by business cycles.

Income Smoothing, Earnings Informativeness, Institutional Ownership, business cycles