PENGARUH PROFITABILITAS, RESIKO KEUANGAN, NILAI, DAN UKURAN PERUSAHAAN, SERTA STRUKTUR KEPEMILIKAN TERHADAP PRAKTIK PERATAAN LABA
WARDHANI, ERIN ISMU
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Income Smoothing practice is possible because of the flexibility in determining the accounting policy in the Accounting Standard. Income smoothing practices could give a description which does not represent the company’s performance. This might result in wrong decisions making by the investors. This research designed to examine the effect of profitability, financial risk, company value and size, and ownership structure on the income smoothing practice. The practice of income smoothing was measured using two methods, the Eckel Index (1981) and discretionary accruals. This research aimed to determine the effect of the mentioned variables toward income smoothing practice using two different methods, and to determine whether there is a significant difference in the results between both methods. The total number of companies taken as sample for Eckel Index measurement is 74 companies, while 59 companies are taken as sample for discretionary accrual measurement. The results of Eckel Index model indicated that profitability, company value and size, proportion of public ownership, and the presence of managerial ownership do not have significant effect toward the practice of income smoothing. Company risk variable was found to have negative significant effect. The results of discretionary accrual model indicated that financial risk, company value, and the proportion of public ownership do not significantly affect the practice of income smoothing; however, profitability and company size were found to have negative significant effect on the practice of income smoothing. Managerial ownership variable was found to have significant effect but in contrary direction. Based on the results analysis, it was proven that both models have significant difference in the results.