Investigating the impact of profit smoothing on the current and future reaction coefficient of profit according to the role of the information environment

This research examines the effect of profit smoothing index ERC and FERC. In this connection, the effect of information environments has also been investigated. The ERC is one of the criteria for stock price evaluation, and profit smoothing can affect the profit price. If profit smoothing increases the ability to inform information in predicting future profit, it may have a positive effect on the FERC. The purpose of this research is to investigate these two questions: Does profit smoothing increase the ERC? In transparent information environment, does profit smoothing increase the FERC? Or not. To empirically investigate this issue, the data of 83 companies admitted to the Tehran Stock Exchange during the years 2013 to 2017 were analyzed. The findings do not confirm the effect of profit smoothing on the current and future reaction coefficient of profit, and the information environment, both transparent and non-transparent, does not affect this relationship.