Indonesian Journal of Law and Economics Review
Vol 18 No 3 (2023): August
Finance Management

Influence Factors on Income Smoothing in Manufacturing Companies: Evidence from Indonesia's Stock Exchange
Faktor-Faktor yang Mempengaruhi Perataan Laba (Income Smoothing) pada Perusahaan Manufaktur: Bukti dari Bursa Efek Indonesia


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  • Eny Maryanti*,
  • Sarwenda Biduri ,
  • Herlinda Maya Kumala Sari ,
  • Luluk Putri Fauziah
Eny Maryanti
Universitas Muhammadiyah Sidoarjo, Indonesia *
Sarwenda Biduri
Universitas Muhammadiyah Sidoarjo, Indonesia
Herlinda Maya Kumala Sari
Universitas Muhammadiyah Sidoarjo, Indonesia
Luluk Putri Fauziah
Universitas Muhammadiyah Sidoarjo, Indonesia

(*) Corresponding Author
Picture in here are illustration from public domain image or provided by the author, as part of their works
DOI: https://doi.org/10.21070/ijler.v18i3.952
Published August 10, 2023
Keywords
  • Income Smoothing,
  • Manufacturing Firms,
  • Institutional Ownership,
  • Managerial Ownership,
  • Emerging Markets
How to Cite
Eny Maryanti, Biduri , S., Kumala Sari , H. M., & Fauziah, L. P. (2023). Influence Factors on Income Smoothing in Manufacturing Companies: Evidence from Indonesia’s Stock Exchange. Indonesian Journal of Law and Economics Review, 18(3). https://doi.org/10.21070/ijler.v18i3.952

Copyright (c) 2023 Eny Maryanti, Sarwenda Biduri , Herlinda Maya Kumala Sari , Luluk Putri Fauziah

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

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Abstract

This study investigates the determinants of income smoothing in Indonesian manufacturing firms listed on the stock exchange during 2016-2021. The research examines the impact of Institutional Ownership, Managerial Ownership, Return on Assets, Debt to Equity Ratio, and Ln Total Sales on Income Smoothing using binary logistic regression analysis. The findings reveal that Institutional Ownership, Managerial Ownership, and firm size significantly influence income smoothing, while Financial Leverage and Profitability do not exhibit significant effects on Income Smoothing. These results contribute to the understanding of income smoothing practices and hold implications for corporate governance and financial reporting practices in emerging markets.

Highlight:

  • Determinants of Income Smoothing: This study delves into the factors driving income smoothing in Indonesian manufacturing companies listed on the stock exchange between 2016 and 2021.
  • Influential Factors: Institutional Ownership, Managerial Ownership, and firm size are identified as significant influencers of income smoothing, shedding light on their impact within this context.
  • Implications for Governance and Reporting: The study's outcomes offer valuable insights for corporate governance practices and financial reporting strategies, particularly in the dynamic landscape of emerging markets.

Keyword: Income Smoothing, Manufacturing Firms, Institutional Ownership, Managerial Ownership, Emerging Markets

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