The aimed of this study was to examine the influence of company’s
characterictics toward income smoothing practice among listed companies at Jakarta
Stock Exchange. Income smoothing practice used by the management to diminish the
variability of a stream of reported income numbers related to some perceived target
stream by manipulating artificial (accounting) and real (transactional) variables (Koch,
1981).
characterictics toward income smoothing practice among listed companies at Jakarta
Stock Exchange. Income smoothing practice used by the management to diminish the
variability of a stream of reported income numbers related to some perceived target
stream by manipulating artificial (accounting) and real (transactional) variables (Koch,
1981).
The factors being examined were industrial type, size of the company, company’s
profitability ratios, company’s operating leverage ratios and company’s net profit
margin. Index Eckel is used to determine the income smoothing practice. The object of
income smoothing in this study is the net profit of the company. The study was using 60
companies listed in Jakarta Stock Exchange, with a period between 2000-2002.
The hypothesis was tested using binary logistic regression. The first hypothesis
was used to examine the influence of industrial type of the company to income smoothing.
The second hypothesis was used to examine the influence of size of the company to
income smoothing. The third hypothesis was used to examine the influence of company’s
profitability ratios to income smoothing. The fourth hypothesis was used to examine the
influence of company’s operating leverage ratios to income smoothing. The fifth
hypothesis was used to examine the influence of company’s net profit margin to income
smoothing.
The result of this study showed that some of the listed companies at Jakarta Stock
Exchange were committed to income smoothing practice. Binary logistic regression
showed that industrial type, size of the company, company’s profitability ratios,
company’s operating leverage ratios and company’s net profit margin did not have
significant influence to income smoothing.
Keywords: Industrial type, size of the company, company’s profitability ratios, company’s
operating leverage ratios, company’s net profit margin, income smoothing.
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