EFFECT OF PROFITABILITY AND LEVERAGE ACTION ALIGNMENT OF EARNINGS (INCOME SMOOTHING) (A CASE STUDY ON A COMPANY MANUFACTURING CONSUMER GOODS INDUSTRY SECTOR, FOOD AND BEVERAGE SUB-SECTORS LISTED IN INDONESIA STOCK EXCHANGE PERIOD 2016-2020)
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Date
2021
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Widyatama University - WIBEST
Abstract
Financial reports are a form of management accountability for industrial
performance which will later help investors in decision-making, industry tools used
in their work using information about the interests of the company. Agency theory
underlies the idea of income smoothing which encourages industrial management to
ensure favorable accounting policies. One of the actions that management can try is
to apply the practice ofincome smoothing. The existence of income smoothing
practices can provide biased data, thus influencing investor decisions. Explaining,
identifying and analyzing the effect of ROA and DER variables on income
smoothing practices is the aim of this study and is assisted by using logistic
regression in data processing. The population used is the food and beverage subsector
manufacturing companies from 14 industries listed on the IDX for 4 years
from 2016-2020. The independent variables in this study are Return on Assets
(ROA) and Debt to Equity Ratio (DER), and the dependent variable in this study is
the practice of income smoothing. The analysis method uses logistic regression with
the support of the SPSS Statistic application type 21.