The Impact of Audit Committee, Firm Size, Profitability, and Leverage on Income Smoothing
Journal Title: Indian-Pacific Journal of Accounting and Finance - Year 2018, Vol 2, Issue 1
Abstract
The objective of this study is to examine the impact of the audit committee, firm size, profitability, and leverage on income smoothing in manufacturing companies listed in Indonesia stock exchange for the period of 2013-2015. Regression statistics are employed to analyse the secondary source of data collected from the annual report of the companies. Measurement of income smoothing is proxied by discretionary accruals. The results of the study reveal that the firm size has a direct positive influence on income smoothing in the listed manufacturing companies in Indonesia. In essence, the more significant a firm size, the more actively performed income smoothing practices. In contrast, profitability indicates an adverse effect on income smoothing in the listed manufacturing companies. The adverse effect indicates that the higher the profit generated, the lesser the income smoothing practices performed. Similarly, leverage posits an adverse effect on income smoothing in the manufacturing sector. This indicates the smaller the risk of companies debt, the more exceptional the practice of income smoothing occurs. The audit committee size similarly shows a negative influence on income smoothing in the listed manufacturing companies. This finding indicates the larger audit committee size, the smaller practice of income smoothing. This occurs because the audit committee oversight function on financial reporting is more efficiently performed. The result of this research shows the contribution to theory, practice, and method, especially in developing countries.
Authors and Affiliations
Veronica Indrawan, Sukrisno Agoes, Hisar Pangaribuan, Oluwatoyin Muse Johnson Popoola
Keywords
Related Articles
- EP ID EP611089
- DOI -
- Views 116
- Downloads 0
Preface to the Volume 2 Issue 4 of Indian-Pacific Journal of Accounting and Finance
I welcome you to the Volume 2 Issue 4 of Indian-Pacific Journal of Accounting and Finance (IPJAF). In this Issue 4, all the presentations are international research with emphasis on Islamic financing, entrepreneurship,...
The Empirical Study on Market Liquidity and Determinants of Sukuk in Malaysia
The purpose of this study is to examine the relationship between market liquidity and the determinants of Sukuk in Malaysia’s perspective. This study is also to determine whether the Sukuk market is also reacting as simi...
National Culture and Sustainability Disclosure Practices: A Literature Review
The aim of this paper is to examine the extent to which national culture is an explanatory variable for firm’s disclosure choices for sustainable development in the advanced, emerging and developing nations of the world,...
Effect of Risk Management Committee on Monitoring Mechanisms
Corruption has become an identification label for many African countries of which Nigeria is one of the top listed countries. Monitoring mechanisms (MM) is therefore at the forefront of issues being considered by governm...
Mediating Effect of Quality-Differentiated Auditor on the Relationship between Managerial Ownership and Monitoring Mechanisms
Over the past decade, most studies in corporate governance and audit market have emphasised the importance of monitoring mechanisms (MM), especially after the global economic meltdown resulting from the Enron saga. The l...