Do China's Listed Firms with Loss Smooth Income in the Fourth Quarter?

Western researchers thought that managers of the companies will smooth in- come and decrease the fluctuation of earnings to avoid dissatisfaction of the stockholders.To testify this theory in China,we chose listed companies with loss in Shanghai and Shenzhen Stock Exchange as research sample and did an empirical study on income smoothing in the fourth quarter.However,we found that these companies with loss didn't smooth earnings in the fourth quarter and,on the contrary,they took a big bath to further decrease their earn- ings in the year of loss.Moreover,the firms with heavier loss would more likely to take a big bath.Corporate governance,efficiency of capital market and the regulation from China's Se- curities Regulation Committee are some important reasons for this.