Income smoothing practices and empirical testing using discretionary accounting changes
Journal Title: Journal of Economics, Business, & Accountancy Ventura - Year 2014, Vol 17, Issue 1
Abstract
Financial statements of listed firms are analyzed by financial analysts and investors. In this case, the firms may suffer from stock price declines if they do not meet market expectations. Listed firms may not only have incentives to avoid income declines and losses, they also have incentives to meet or beat market expectations in order to pre- vent declines in stock price. Income smoothing (IS) is the intentional dampening of fluctuations about some levels of income that is considered to be normal for a firm. IS manipulation has a clear objective, which is to produce a steadily growing stream of income. In this study, income-smoothing practices of Indonesian listed companies are detected through empirical tests using discretionary accounting changes (DAC) as IS instrument. Sample firms are classified as smoothers and non-smoothers using income smoothing behavior index. Results show that possible motivations of DAC transac- tions are income smoothing. The two independent variables such as external audit quality institutional ownership have significant influence towards IS practices. But, the type of industry has no significant relationship towards IS Practices.
Authors and Affiliations
Theresia Trisanti
Keywords
Related Articles
- EP ID EP468153
- DOI 10.14414/jebav.v17i1.271
- Views 60
- Downloads 0
State Sukuk Potential in Reducing Indonesia Budget Deficit, 2009-2015
The purpose of this study is to identify potential retail state sukuk as part of state bonds that are used to replace foreign debt and lower the government's budget deficit. This study is important because the government...
Optimization of governance model of post-food harest and distribution in msme centers in 5 subdistricts in sidoarjo regency
The purpose of this research is to formulate the model of post-harvest food commodity governance and its distribution management in 5 districts of Sidoarjo Regency, so that the center of MSMEs can give real contribution...
The mediating effect of life complexity and dynamic, and work-life conflict on the effect of motivation on continuance commitment and quality of life of female factory workers in Jabodetabek
Motivation arising due to the need can be a factor that increases continuance com-mitment to an organization, which is expected to have an effect on the improvement of the quality of life. This research was conducted on...
Relationship Pattern of Pedagogic Competence with Moderating Structural Equation Modeling Score Factor (MSEM-SF)
The quality of education depends highly on the capacity of educational units in transforming the learners to gain added value, whether it is related to the aspects of thinking, taste, heart, and body. Among the componen...
The Impact of Knowledge Management on Work Performance through the Employees’ Competence: A Case Study of “MP” Bank
Since it was established in 2003 until 2014, the “MP” bank had never provided its human resources development training. As a result, it decreased its employees’ performance which ultimately gave a bad impact on the bank....