Determinants of Income Smoothing Practice in Indonesia Manufacturing Companies

Diana, Patricia (2024) Determinants of Income Smoothing Practice in Indonesia Manufacturing Companies. Asia-Pacific Management Accounting Journal, 19 (2). ISSN 2550-1631

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Abstract

Income is a highly informative account that stakeholders can use to evaluate a company's performance. A positive signal will be generated if profit levels remain consistent; consequently, management frequently endeavors to present earnings that are consistent. The primary aim of this study is to gather empirical data regarding the impact of company size, financial leverage, profitability, cash holding, and firm value on the implementation of income smoothing practices. The sampling technique used is purposive sampling while the data analysis method utilized is logistic regression. The sample that passed the criteria was determined as many as 47 companies with period from 2017 to 2020. Income smoothing practice is indicated using eckle index. The results obtained show that only firm size and firm value have a significant effect on income smoothing. Based on data analysis, it is found that management tends to flatten earnings on account items that require consideration in calculations such as impairment reserves and bad debts. This study deepens prior results with explanation what smoothing actions are carried out on which accounts in the financial statements.

Item Type:	Article
Creators:	Diana, Patricia
Contributors:
Keywords:	Cash Holding, Firm Value, Income Smoothing, Leverage, Size, Profitability
Subjects:	600 Technology (Applied Sciences) > 650 Management and Public Relations > 657 Accounting > 657.3 Financial Reporting
Sustainable Development Goals:	Goal 08. Promote sustained, inclusive and sustainable economic growth, full and productive employment and work for all Goal 09. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Divisions:	Faculty of Business > Accounting
Date Deposited:	13 Oct 2026 10:31
URI:	https://kc.umn.ac.id/id/eprint/49689

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