The relationship between income smoothing and economic value added

Nowadays, the role of different factors on the operation of different companies can be studied. Because the historical information could not determine the different value of company assets & profit. The financial reports have been criticized because they have the low quality & they do not relate to the current information & this reason causes to recognize the economical value added. This article (study) tends to recognize the adjustments of the accounting profits such as the accounting income smoothing on the new evaluating indicators e.g. economical value added. There fore, the article will start with title of “ The relationship between income smoothing & economical value added”. The economical value added causes that the managers of the staff think & act as the company share wholders & they do not consider the capital as the cheep & free source. As it is considered & studied the relationship between the income smoothing & the economical value added is effect able. There are obvious difference between the companies which use the income smoothing & the companies which do not use the income smoothing. There fore, it has been considered to the manager that they use EVA standard for their decision models. In this article, we analyze the income smoothing & the economical value added & its effects.