Factors influencing income smoothing in manufacturing companies listed on the Indonesia Stock Exchange

Income smoothing is defined as a way used by management to reduce fluctuations in reported income. The purpose of this study is to examine factors that influence the practice of income smoothing in manufacturing companies listed on the Indonesia Stock Exchange. The data were selected using a purposive sampling method. The sample used in this study was 47 firms listed on the Indonesia Stock Exchange and the observation period was the three-year period from 2014 until 2016. The hypothesis was tested using binary logistic regression. The result of the binary logistic regression showed that only financial leverage influences income-smoothing practices, while firm size, profitability, public ownership, the value of the firm, the deviation standard, institutional ownership and net profit margin do not influence income smoothing.