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)
Keywords:
ROA, DER, Income SmoothingAbstract
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 sub-sector 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.
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