INCOME SMOOTHING AS DISFUNCTIONAL BEHAVIOR STRATEGY TO DEVELOP PUBLIC OPINION OF GOOD PERFORMANCE
Deni Hamdani (a*), Nugraha (b), Devyanthi Syarif (c)

(a),(c) School of Bussiness, STIE INABA
Jalan Soekarno Hatta No. 448 , Bandung 40253, Indonesia
deni.hamdani[at]inaba.ac.id
devyanthi.syarif[at]inaba.ac.id
(b) Universitas Pendidikan Indonesia,
Jalan Setiabudhi, Bandung, Indonesia
nugraha[at]upi.edu

Abstract

Naturally income smoothing is defined as the intervention of management in external financial reporting to benefit himself (manager). Mostly, this is an unplanned and direct process carried out by management. On the contrary, intentionally income smoothing occurs because of interference from management.
This research aimed at investigating the occurrence of income smoothing and estimating the magnitude of other factors in determining income smoothing in a company listed on the Indonesia Stock Exchange for the period 2013-2019. Furthermore, this research investigated the effect of past factors on management behavior in conducting income smoothing strategies. Time Series and Cross Section data were employed in this research. Therefore, the suitable estimation model was panel data regression (Pooled Regression) equipped with Fixed Effect Model (FEM), Random effects Model (REM) and Hausman Test.

Keywords: Company’s size, Profitability, Financial Leverage, Income Smoothing, Profit Quality

Topic: Financial Management and Accounting