EAS Publisher | Good Corporate Governance and Income Smoothing Practice: Studies on Companies Listed in Kompas100 Index in Indonesia

Good Corporate Governance and Income Smoothing Practice: Studies on Companies Listed in Kompas100 Index in Indonesia

DOI : https://doi.org/10.36349/EASJEBM.2020.v03i06.013

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This study aims to examine the impact of corporate governance, financial leverage, and dividend policy on income smoothing practices of companies listed in the Kompas100 Index from 2014 to 2018 on the Indonesia Stock Exchange. Corporate governance in this study was proxied by the size of independent board of commissioners, audit committee. Using the purposive sampling method, total samples that fit the criteria are 62 companies with a total data used of 248 observations. Data were analyzed using logistic regression. The results showed that the size of independent board of commissioners, classification of public accounting firms, and dividend policy has a significant influence on income smoothing practices, while the audit committee and financial leverage did not effect on income smoothing practices. The results of this study indicate that the practice of income smoothing in Indonesia is carried out with the aim of reducing fluctuations in corporate profits and is expected to provide a positive signal for investors that the company is able to create stable profits each year.

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