Abstract
Purpose: This study aims to hypothesize the companies that apply income smoothing to Industry trade, services, and investment on Indonesia Stock Exchange. Theoretical framework: Theoretical basis of the income smoothing hypothesis was used to examine the differences in stock returns between the trading, service, and investment industries that apply income smoothing on the Indonesia Stock Exchange. Test differences in stock risk between the trading, service, and investment industries that apply income smoothing and the trading, service, and investment industries do not determine income smoothing on the Indonesia Stock Exchange. Design/methodology/approach: The0 1method0 1used0 1in0 1this0 1study0 1is0 1a0 1comparative0 1descriptive0 1method.0 1The0 1analysis0 1used0 1is0 1descriptive0 1analysis,0 1normality0 1test,0 1and0 1t-test0 1to0 1conclude0 1whether0 1there0 1are0 1differences0 1in0 1the0 1treatment0 1of0 1these0 1variables.0 1In0 1addition,0 1it0 1also0 1calculates0 1the0 1actual0 1return0 1and0 1risk0 1of0 1the0 1issuer’s0 1shares0 1in0 1the0 1trading,0 1service,0 1and0 1investment0 1industries0 1on0 1the0 1Indonesia0 1Stock0 1Exchange. Findings: There is no significant difference between company returns and profits and returns of non-profit companies in trading, service, and investment sector companies listed on the Indonesia Stock Exchange. In addition, there is no significant difference between the shares of risk separator companies and the risk returns of non-company shares in trading, service, and investment companies listed on the Indonesia Stock Exchange. Research, Practical & Social implications: The average risk level of companies that do income smoothing is lower than the average risk level of companies that do not. The level of risk in shares is a description of the volatility of share prices. The higher the variation in stock prices, the higher the risk investors face. Originality/value: The study highlighted that changes in the information that occurs on a company’s profitability in various ways would be more likely to impact the follow-up of information users, including the application of income smoothing.
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