Impact of Company Size, Profitability, Leverage, and Firm Value on Earnings Smoothing
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Oct 10, 2024
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Abstract
The purpose of this study is to examine the effects of firm valuation, profitability, size, and financial leverage on earnings smoothing in companies that are listed on the Indonesia Stock Exchange (IDX) MNC36 Index between 2017 and 2022. The study utilised a quantitative methodology, utilising secondary data obtained from the annual reports of MNC36 Index companies. 36 businesses were included in the study; these were chosen based on three criteria: they used Rupiah currency, had consecutive yearly financial reports available, and were consistently included on the MNC36 Index. Using SPSS software, a logistic regression analysis was performed to assess the model's fit using the Hosmer and Lemeshow Goodness of Fit Test. These theories are refuted by the data, which show that firm size and profitability have no discernible effects on earnings smoothing. On the other hand, financial leverage and company value play a crucial role, since they stimulate management to employ earnings smoothing as a risk mitigation strategy and improve investor perception
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How to Cite
Saktiwibowo, N. R., & Nasongko, N. (2024). Impact of Company Size, Profitability, Leverage, and Firm Value on Earnings Smoothing . Enrichment : Journal of Management, 14(4), 559-569. https://doi.org/10.35335/enrichment.v14i4.2039
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Putri, N. K., Amanah, D. M. N., Aini, N., & Soelistyoningrum, J. N. (2023). Determinants of stock price performance in the Indonesian basic industry. Journal of Enterprise and Development, 5(3), 585–605. https://doi.org/10.20414/jed.v5i3.8017
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Butar, L. K. ., & Sudarsi, S. (2012). Pengaruh Ukuran Perusahaan, Profitabilitas, Leverage, Dan Kepemilikan Institusional Terhadap Perataan Laba: Studi Empiris pada Perusahaan Food and Beverages yang Terdaftar di BEI. Dinamika Akuntansi, Keuangan Dan Perbankan, 1(2), 143–158.
Fitriani, A. (2018). Pengaruh Profitabilitas, Ukuran Perusahaan, dan Financial Leverage terhadap Praktik Perataan Laba (Income Smoothing) pada Perusahaan Farmasi yang Terdaftar di Bursa Efek Indonesia Periode 2011-2015. Jurnal Samudra Ekonomi Dan Bisnis, 9(1), 50–59. https://doi.org/10.33059/jseb.v9i1.461
Ghofir, A., & Yusuf. (2020). Effect of Firm Size and Leverage on Earning Management. Juournal of Industrial Engineering & Management Research, 1(3), 218–225.
Hadi Cahyadi, H. W. M. (2020). Factors Influencing Income Smoothing Practices With Firm Size Moderation. Jurnal Akuntansi, 24(2), 250. https://doi.org/10.24912/ja.v24i2.695
Indrawan, A. S., & Damayanthi, G. A. E. (2020). The Effect of Profitability, Company Size, and Financial Leverage of Income Smoothing. American Journal of Humanities and Social Sciences Research, 4(2), 9–13. www.ajhssr.com
Indrawan, V., Agoes, S., Pangaribuan, H., & Popoola, O. M. J. (2018). The Impact of Audit Committee, Firm Size, Profitability, and Leverage on Income Smoothing. Indian-Pacific Journal of Accounting and Finance, 2(1), 61–74. https://doi.org/10.52962/ipjaf.2018.2.1.42
Kosasih, H., Toni, N., & Simorangkir, E. N. (2021). Effects of Profitability, Financial Leverage, and Dividend Policy on Income Smoothing Practice with Firm Size as a Moderator among Listed Manufacturing Companies in Indonesia. IOSR Journal of Economics and Finance, 12(4), 41–50. https://doi.org/10.9790/5933-1204044150
Musyafa, K. A., & Kholilah, K. (2023). Cash Holding, Financial Leverage, Profitability, Firm Size, Income Smoothing: Moderating Managerial Ownership. E-Jurnal Akuntansi, 33(4), 1085. https://doi.org/10.24843/eja.2023.v33.i04.p15
Nalarreason, K. M., T, S., & Mardiati, E. (2019). Impact of Leverage and Firm Size on Earnings Management in Indonesia. International Journal of Multicultural and Multireligious Understanding, 6(1), 19. https://doi.org/10.18415/ijmmu.v6i1.473
Nugroho, S. A., Kuntari, Y., & Triani. (2021). Pengaruh Ukuran Perusahaan, Financial Leverage, Profitabilitas dan Nilai Saham pada Tindakan Perataan Laba (Studi Kasus pada Perusahaan Automotive and Components yang Terdaftar di Bursa Efek Indonesia Periode 2014 – 2018). Jurnal Ilmiah Aset, 23(1), 85–96.
OBEIDAT, M. I. S. (2021). Relationship Between Firm Size and Profitability with Income Smoothing: Evidence from Food and Beverages (F&B) Firms in Jordan. Journal of Asian Finance, 8(6), 789–0796. https://doi.org/10.13106/jafeb.2021.vol8.no6.0789
Oktoriza, L. A. (2018). Pengaruh Leverage, Profitabilitas, Ukuran Perusahaan, Nilai Perusahaan, Aktivitas Komite Audit Dan Kepemilikan Manajerial Terhadap Praktik Perataan Laba. Stability: Journal of Management and Business, 1(2), 188–203. https://doi.org/10.26877/sta.v1i2.3227
Prasetyoningrum, A. K., Hapsari, V., & Farida, D. N. (2021). The Effect of Return on Assets, Company Size and Financial Leverage on Smoothing Measures (Empirical Study on State-Owned Construction Companies Listed in The Jakarta Islamic Index for The 2015-2018 Period). AFEBI Islamic Finance and Economic Review, 3(02), 70. https://doi.org/10.47312/aifer.v3i2.317
Putra, G., Bagus, I., & Astika, P. (2023). The Effect of Profitability, Firm Size, Leverage and Firm Value on Income Smoothing. American Journal of Humanities and Social Sciences Research (AJHSSR), 07(01), 89–94. www.ajhssr.com
Putri, N. K., Amanah, D. M. N., Aini, N., & Soelistyoningrum, J. N. (2023). Determinants of stock price performance in the Indonesian basic industry. Journal of Enterprise and Development, 5(3), 585–605. https://doi.org/10.20414/jed.v5i3.8017
Rizqia, D. A., Aisjah, S., Program, P., & Java, E. (2013). Effect of Managerial Ownership , Financial Leverage , Profitability , Firm Size , and Investment Opportunity on Dividend Policy and Firm Value. Research Journal of Finance and Accounting, 4(11), 120–130.
Rosli, M. H., Fawzia, F., Ariff, M., & Said, J. (2018). Balanced Scorecard (BSC): Does It Really Matter in Malaysian Private Institutions of Higher Learning? Accountability of Malaysian Statutory Bodies View project Intellectual capital and innovation capital View project. In International Seminar on … (Issue July 2019). https://www.researchgate.net/publication/334598467
Saputri, D. F., & Suwarno, A. E. (2023). The Effect of Firm Size , Profitability , Financial Leverage , and Stock Value on Income Smoothing in Manufacturing Companies Listed on the Indonesia Stock Exchange ( IDX ) in 2018-2021. International Journal of Latest Research in Humanities and Social Science (IJLRHSS), 06(05), 22–31.
Sitompul, R. M., Gowon, M., & Jumaili, S. (2024). The Effect of Profitability, Financial Leverage, Firm Size, Dividend Policy, and Stock Value on Income Smoothing in Food and Beverages Companies Listed on Indonesia Stock Exchange in 2020-2022. International Journal of Multidisciplinary Approach Research and Science, 2(02), 766–774. https://doi.org/10.59653/ijmars.v2i02.731
Sivaram, M., Hudaya, A., & Hapzi, A. (2019). Building a Purchase and Prchase Decision: Analysis of Brand Awareness and Brand Loyalty (Case Study of Private Label Products at Alfamidi Stores In Tangerang City). Dijemss, 1(2), 235–248. https://doi.org/10.31933/DIJEMSS
Widjaja, S. E., & Diana, P. (2024). How Qualified is The Company’s Earning Quality: a Study of The 100 Most Liquid Indonesian Companies. Paradigma, 21(1), 112–128. https://doi.org/10.33558/paradigma.v21i1.8344
Widyastuti, D. R., Wijayanti, A., & Masitoh W, E. (2022). Pengaruh kepemilikan manajerial, profitabilitas, leverage dan ukuran perusahaan terhadap nilai perusahaan. Inovasi, 18(2), 294–304. https://doi.org/10.30872/jinv.v18i2.10617
Wijaya, E., Ali, Z., Hocky, A., Anton, A., & Oliver, W. (2023). Impact of Company Size, Income on Share, Debt to Equity, Total Assets Revenue and Net Profit on The Kompas 100 Company Value Index. Proceeding of International Conference on Business Management and Accounting (ICOBIMA), 2(1), 218–226.
Yulia, M. (2013). Pengaruh Ukuran Perusahaan, Profitabilitas, Financial Leverage, dan Nilai Saham Terhadap Perataan Laba (Income Smoothing) Pada Perusahaan Manufaktur, Keuangan, dan Pertambangan, yang Terdaftar di BEI. Skripsi Fakultas Ekonomi Universitas Negeri Padang, 1–24. https://ejurnal.unisri.ac.id/index.php/rsfu/article/view/2568