Analysis of Factors Affecting Income Smoothing In Banking Companies Listed In Indonesia Stock Exchange

Abstract

Income smoothing is a method used by management to reduce
the fluctuations in reported earnings to match the company's desired targets. Profit is one of the most important information for decision making. So that management tends to do disfunctional behavior (inappropriate behavior). This study aims to examine the effect of net profit margin, debt to equity ratio, debt to total assets, foreign ownership structure and managerial ownership structure on income smoothing in banking companies listed on the Indonesia Stock Exchange from 2016 to 2018. The sampling method used was purposive sampling method and obtained a sample of 10 companies and observations were made for 3 years, namely 2016-2018, the hypothesis was tested using logistic regression analysis techniques. The results showed that net profit margin has no effect on income smoothing,debt to equity ratio has positive effect on income smoothing, debt to total assets has no effect on income smoothing, foreign ownership structure has no effect on income smoothing, managerial ownership structure has no effect on income smoothing.