Big Bath” behavior refers to an event in which companies are perceived as overestimating the

amount of asset write-downs or liability accruals to deliberately reduce current period earnings. The
effect is to remove future costs from the balance sheet or to create reserves that can be used to
increase future period earnings. An example of big bath behavior would be to time recognition of
restructuring costs for a year when its income is already depressed. An analyst or potential investor
may be concerned with this behavior because of the inaccurate portrayal of a company’s costs and
or earnings that result.

Refference : https://www.scribd.com/document/174353209/Dmp3e-Ch06-Solutions-01-26-10-Final