The Effect of Profitability, Company Size, and Financial Leverage of Income Smoothing

ABSTRACT : The current financial statement is an investor’s consideration to make a decision. One way of management to show good financial report, that is with income smoothing.The purpose of this study was todetermine the effect of profitability,company size, and financial leverage through income smoothing. Thisresearch was conducted at company which listed in BEI and LQ45 index year 2014-2018. The number ofsamples taken are 24 companies with purposive sampling method. Data collected through non-partisipanobservation. Data analysis technique used is logistic analysis.Based on the results of the analysis found that profitability has not direct effect on income smoothing while firm size has a negative effect on income smoothing. Financial leverage has a positive effect on income smoothing.

Keywords: income smoothing, profitability, firm size and financial leverage