The Effect of Profitability, Financial Leverage, Cash Holding, Audit Committee and Auditor Reputation on Income Smoothing

ABSTRACT :Information in financial reports that tends to be a major concern for investors in making investment decisions is earnings information. The practice of income smoothing is an action taken by company management in an effort to reduce fluctuations in earnings so that reported earnings appear stable. The purpose of this study is to obtain empirical evidence regarding the effect of profitability, financial leverage, cash holding, audit committee and auditor reputation on income smoothing practices. This research was conducted on property, real estate and building construction companies listed on the Indonesia Stock Exchange in 2016-2019. The number of samples obtained were 51 companies with a purposive sampling method. The number of observations during the 4 years of the study period was 204. The data analysis technique used was logistic regression analysis. Based on the results of logistic regression analysis, it was found that profitability had no effect on income smoothing practices, financial leverage had no effect on income smoothing practices, cash holding had a positive effect on income smoothing practices, the audit committee had no effect on income smoothing practices and auditors’ reputation had no effect on income smoothing practices. .
KEYWORDS:income smoothing, cash holding, audit