A frequency histogram of the smoothing index based on each of the earnings expectations models is shown in Figure 1. It can be seen that the smoothing index based on the simple random walk model is roughly symmetric, although as the values of the index are restricted to a finite range, the distribution is not normal, with the values bunching at zero and one. 5 The incorporation of a drift component increases the mean smoothing measure and results in a distribution which is skewed to the left.