Abstract
The purpose of this study is to determine the effect of profitability, financial leverage, and dividend policy on income smoothing in manufacturing companies registered on the Indonesia Stock Exchange in 2016-2018 with firm size as a moderating variable. This study used 38 manufacturing companies as a sample in this study and analysis of logistic regression. The results of this study indicated that profitability has a significant negative effect on income smoothing; firm size has a significant positive effect on income smoothing. In contrast, financial leverage and dividend policy have an insignificant effect on income smoothing. Firm size weakens profitability and the effect of dividend policy on income smoothing while firm size does not moderate financial leverage's effect on income smoothing.
Highlights
The financial statements describe the state of the company performance in the financial reporting process in one period containing the company's financial information for internal and external parties
This study examines the effect of profitability, financial leverage, and dividend policy on income smoothing
It investigates whether firm size moderates in manufacturing listed companies on the Indonesia Stock Exchange in 2016-2018
Summary
The financial statements describe the state of the company performance in the financial reporting process in one period containing the company's financial information for internal and external parties. External parties, such as investors and creditors, use this. Companies use financial reports to see the development of company financial statement information in terms of profits. We can see the criteria for companies in seeing company profits from the performance of management in stabilizing profits, which makes investors interested in investing (Indrawan et al, 2018). The management has the opportunity to perform dysfunctional behavior through income smoothing practices (Handoyo and Fathurrizki, 2018)
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