Income Smoothing Research Articles

Non-farm income and environmental efficiency of the farmers: Evidence from India

In the face of various agro-climatic shocks when agricultural income becomes highly volatile, farmers often undertake multiple jobholding and engage in non-farm activities for income smoothing. The earnings from these activities are often used to purchase productivity enhancing agricultural inputs. In this context, the impact of non-farm income on intensification of agricultural inputs and the consequent impact on over-all farm efficiency is well documented in the literature. However, with a rapid rise in usage of agricultural inputs with environmentally detrimental impact, very little is known about whether non-farm income has any impact on farmers’ environmental efficiency-ability to reduce the amount of polluting inputs to the largest extent possible without reducing the amount of agricultural production. Our study fills the gap in the literature by analysing the impact of non-farm income on environmental efficiency of the farmers. We first estimate the environmental efficiency scores adopting the non-parametric data envelopment analysis (DEA) method and using a household level panel data from Village Dynamics of South Asia project on Indian states for a span of five years (2010–2014). We then estimate the impact of non-farm income on environmental efficiency using Instrumental Variable Tobit Model. Our results show that average environmental efficiency of the Indian farmers was 46 % during the study period indicating the fact that a reduction in polluting agricultural inputs by 54 % was possible without compromising the level of farm production. We also find that for 1 % increase in non-farm income, environmental efficiency of farmers rises by around 4 %. This reflects the environment friendly behaviour of farmers as a channel through which non-farm activities affect usage of environmentally linked inputs. These results provide vital policy insights in terms of how non-farm activities could be integrated with policies related to farming, in order to ensure sustainable agricultural practices.

Influence of Debt Financing on Income Smoothing Practices among Listed Deposit Money Banks in Nigeria

This study examined the influence of debt financing on income smoothing among Nigerian listed deposit money banks. The study is specifically examined the influence of total debt ratio on income smoothing. Data collected from sampled twelve (12) listed Nigerian DMBs out of the fourteen (14) listed banks for period from 2009 to 2021. Data were analyzed using random effect panel regression. The results revealed that total debt to equity ratio exerts negative and significant influence on income smoothing measured by absolute discretionary accrual (t= -2.87; p<0.05) respectively. These implied that an increase in total debt ratio will reduce income smoothing. This suggests that the probability of being income smoother is lower when a firm has higher total debt. The study concluded that total debt ratio was negatively influenced the income smoothing among listed deposit money banks. The study therefore, recommends that Nigerian banks should carefully manage their debt levels so as to avoid income smoothing practices by management.

Determinants of Income Smoothing Practices with Managerial Ownership Structure and Firm Size as Moderators

This study aims to determine the effect of profitability, dividend policy, financial leverage on income smoothing practices and the effect of moderating managerial ownership structure and firm size on the effect of profitability, dividend policy, financial leverage on income smoothing practices. The research design used causal quantitative. The population of this study were all manufacturing companies on the Indonesia Stock Exchange as many as 157 companies. The sampling technique used purposive sampling with a total sample of 30 companies. The data analysis technique used moderated regression analysis. The results show that (1) profitability had a significant negative effect on income smoothing practices, (2) dividend policy had a significant positive effect on income smoothing practices, (3) financial leverage had a significant positive effect on income smoothing practices, (4) managerial ownership structure strengthens the negative effect of profitability on income smoothing practices, (5) managerial ownership structure weakens the positive effect of dividend policy on income smoothing practices, (6) managerial ownership structure weakens the positive influence of financial leverage on income smoothing practices, (7) firm size weakens the negative effect of profitability on earnings smoothing practices. income smoothing, (8) firm size strengthens the positive effect of dividend policy on income smoothing practices, and (9) firm size strengthens the positive effect of financial leverage on income smoothing practices.

PENGARUH UKURAN PERUSAHAAN, NILAI PERUSAHAAN, FINANCIAL LEVERAGE, NPM DAN PROFITABILITAS TERHADAP PERATAAN LABA

The aim of the study was to examine the effect of firm size, firm value, financial leverage, net profit margin and profitability on income smoothing practices in manufacturing companies listed on the Indonesia Stock Exchange for the period 208-2020. From several sample selection criteria, 35 companies were selected by purposive sampling method that met the criteria. Processing research data using logistic regression analysis which is processed using SPSS (Statistical Product and Service Solution) edition 26. The results shows that company size, financial leverage, net profit margin and profitability have no effect on income smoothing, while firm value has a negative effect to income smoothing. The implication of this study is for investors to be more thorough and critical in assessing the company's performance, especially from the financial side in making investment decisions.

A Time Series Analysis of Noninterest to Interest-Earning Dynamics Between 1984 to 2023 in the US Commercial Banking Sector

Both interest and noninterest earnings form the two critical components of the income stream of commercial banks. While interest earnings are tied to the lending volume and prevailing interest rates primarily dictated by the monetary policy and central bank interventions, noninterest earnings can come from diversified sources like income from fiduciary activities, trading revenue, service charges on deposit accounts, fee income, etc. Noninterest earnings can be unrelated to lending volume and prevailing interest rates and possibly uncorrelated with the monetary policies. Noninterest earnings may be a more robust source of income, especially during the low-interest rate regimes. Managing the noninterest to interest earnings is a critical component of income smoothing used by the banks. Noninterest earnings have become a significant component of banks’ overall earnings in the last four decades, and the ratio of noninterest to interest earnings has also grown significantly, raising questions about the primary role of the banking sector in financial intermediation as defined by the collection and disbursement of loanable funds throughout the economy. The rise in noninterest earnings also raises questions about the potential conflict of interest especially if banks earn significant consulting income from the same entities that borrow heavily from the banks. In this paper, I look at the time series dynamics of the ratio of noninterest-to-interest earnings spanning nearly four decades from 1984:Q1 to 2023:Q3 for the USA’s FDIC-insured commercial banking sector. Although the ratio has fluctuated over the period and risen from the baseline, it does not exhibit any non-stationarity. The presence of unit root cannot be found during the time period studied. In other words, the ratio of noninterest-to-interest earnings in the US commercial banking sector does not show any explosive and unstainable growth. In a nutshell, the rise in the ratio seems to be an outcome of the broader income diversification strategy used by the banks and not necessarily a dramatic change in the business model of US commercial banking industry.

Factors Influencing Income Smoothing Practice Among Manufacturing Firms in Kenya

This research aims to assess the factors influencing income smoothing practices among manufacturing firms in Kenya. Income smoothing, a financial management strategy used by organizations, intentionally manipulates reported earnings to achieve stable and predictable financial performance. This practice, driven by management incentives and regulatory frameworks, impacts decision-making processes and stakeholder perceptions. This study examines income smoothing practices among manufacturing firms in Kenya and recognizes the unique challenges they face, including fluctuating raw material costs and evolving regulatory environments. Based on theoretical frameworks such as agency theory and signaling theory as well as empirical findings, the factors that influence income smoothing behavior are examined. The most important influencing factors include regulatory frameworks, management incentives, industry competition and economic conditions. The study shows that during economic volatility, companies tend to adopt income smoothing measures to increase stakeholder confidence, while regulatory changes such as the introduction of International Financial Reporting Standards (IFRS) increase transparency and reduce income smoothing. In addition to the compensation structures for executives, competitive pressure and access to capital markets also shape income smoothing practices. Understanding these influencing factors provides insights into the dynamics of income smoothing and its impact on financial transparency and decision-making in the manufacturing sector in Kenya.

THE IMPACT OF PROFITABILITY AND LEVERAGE ON TAX AGGRESSIVENESS WITH INCOME SMOOTHING AS THE MEDIATOR

Information asymmetry and differences in interests between agents and principals are unavoidable problems in agency relationships. Agents with better information than other parties try to maximize their benefits by managing or manipulating reported accounting numbers. Profitability and leverage are common considerations for companies in carrying out income smoothing so that profits are stable and the company looks in good condition in the eyes of stakeholders. In addition, it is also related to the size of the corporate tax burden, so both can be factors that influence the level of corporate tax aggressiveness. This study aims to analyze the direct and indirect effects of profitability and leverage on tax aggressiveness and test the mediation of income smoothing on the effect of profitability and leverage on tax aggressiveness. The research sample was determined using a purposive sampling technique of 26 consumer non-cyclical sector companies listed on the Indonesia Stock Exchange in 2018-2020. Data were analyzed using the WarpPLS 7.0 analysis tool. The results of this study show that profitability and leverage affect tax aggressiveness. However, income smoothing does not affect tax aggressiveness. Income smoothing could not mediate the effect of profitability and leverage on tax aggressiveness. There is no indirect effect between profitability and leverage on tax aggressiveness.

The Moderating Role of Good Corporate Governance on the Influence of Company Size, Share Value, Profitability, and Financial Leverage on Income Smoothing (Study of Primary Consumer Goods Companies listed on the BEI in 2020-2022)

This research aims to determine the influence of company size, share value, profitability, and financial leverage on income smoothing and the moderating role of GCG on the influence of company size, share value, profitability, and financial leverage on income smoothing. This research uses quantitive method , purposive sampling, and logistic regression analysis with SPSS 20. This research shows that profitability has a negative effect on income smoothing. company size, share value, and financial leverage do not affect incomes smoothing. GCG cannot moderate the influence of company size and share value on income smoothing. GCG can strengthen the influence of profitability and financial leverage on income smoothing.

Pengaruh Perataan Laba dan Corporate Social Responsibility Disclosure Terhadap Reaksi Pasar dan Resiko Investasi (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia)

The market reacts to news regarding company earnings, which further suggests that earnings revisions have a negative effect on market reactions. This means that the greater the profit moderation action, the weaker the market reaction to company profit news. CSR agents cannot strengthen or weaken the relationship between income smoothing and market response. This research aims to determine the effect of income smoothing and disclosure of corporate social responsibility on market reactions and investment risk in manufacturing companies listed on the Indonesia Stock Exchange. This research focuses on problem solving to explain the relationship between one variable and another. others in qualitative and quantitative analysis. Based on the research results, it can be concluded that income smoothing does not have a significant effect on market reactions. CSR disclosure does not have a significant effect on market reactions. Income smoothing does not have a significant effect on investment risk. The moderating variables of profit and CSR disclosure, if examined together or simultaneously, do not have a significant influence on increasing market response. Based on the calculation results, it can be seen that there is a difference between investment risk and income smoothing. This disclosure will also produce positive abnormal returns because it contains information that has economic value. With the insights from this research, it is hoped that investors will be able to make investment decisions that will bring extraordinary returns to the market.

The Influence Of Profitability And Financial Leverage On Earnings Management And Its Impact On The Value Of Manufacturing Companies In The Indonesian Stock Ex-change (Case Study Of The Automotive Sub-Sector Period 2018-2022)

The practice of income smoothing still occurs in the Indonesian economy. There are sever-al cases of income smoothing that have occurred, including at PT. Kimia Farma Tbk, PT and Lippo Tbk where these companies have published different financial reports. The purpose of this research is to determine the direct effect of profitability on income smoothing, fi-nancial leverage on income smoothing, profitability on company value, financial leverage on company value, the indirect effect of profitability on company value through income smoothing, financial leverage on company value through income smoothing and Income smoothing has a direct effect on company value. This research uses a mixed method. The population used in this research is automotive sub-sector manufacturing companies listed on the Indonesia Stock Exchange for the 2018-2022 period. The sampling method is to use a purposive sampling technique so that the samples obtained are 50 samples. The re-search results show that there is no direct influence of profitability on income smoothing, there is no direct influence of financial leverage on profit smoothing, there is a direct influ-ence of profitability on firm value, there is no direct influence of financial leverage on firm value, there is no indirect influence income smoothing between profitability and company value, there is no indirect effect of income smoothing between financial leverage on com-pany value and there is no direct effect of income smoothing on company value.

Pengaruh Stock Ownership Terhadap Income Smoothing Dengan Company Size Sebagai Pemoderasi

The study aims to determine the effect of Institutional Ownership, Managerial Ownership, dan Public Ownership on Income Smoothing with Company Size as Moderating in consumer non-cyclical sector companies listed on the Indonesia Stock Exchange (BEI) Period 2020-2022. The research was conducted using a quantitative methods. The data used in this study were secondary data obtained from the financial statements of consumer non-cyclical sector companies listed on the Indonesia Stock Exchange (BEI) Period 2020-2022. The sampling technique used was by purposive sampling with predetermined criteria resulting in 40 companies for 3 years and then the total sample of 120 data. The research analysis method is with logistic regression and uses IBM SPSS to test and process this research data. The results of the research concluded that institutional ownership, managerial ownership, and public ownership had a positive effect on income smoothing. Company size as a moderator is able to strengthen the positive influence of institutional ownership on income smoothing. However, company size is not able to strengthen the positive influence of managerial ownership, and public ownership on income smoothing. Keywords: Company Size; Income Smoothing; Institutional Ownership; Managerial Ownership; Public Ownership.

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

Income smoothing is the intentional normalizing of profits to a specified level or trend. Smoothing is an attempt by the company's management to lessen anomalous variations in profitability, to the extent permitted by solid accounting and management standards. This study aims to explore the effects of many factors, including stock value, dividend policy, firm size, profitability, and financial leverage, on income smoothing approaches. The population of the study consisted of the 84 food and beverage companies that were listed on IDX between 2020 and 2022. The sampling process provides 20 companies for a three-year observation period using a purposive sample method. Logistic regression analysis is used in the data analysis process using the SPSS 26 program. The study's findings indicate that income smoothing is influenced by all variables at the same time. Variable dividend policies significantly have effect on income smoothing, partially. However, there is no effect between the factors of stock value, company size, profitability, or leverage.

The Effect of Earnings Smoothing and Earnings Informativeness on Firm Value with Managerial Ability as a Moderating Variable

This study's goal is to find out how earnings informability and income smoothing affect firm value, with managerial ability as a moderating variable. A quantitative method was used, and financial statements that were listed on the Indonesia Stock Exchange served as the source of the data. The sample population comprised 255 companies within the Consumer Non-Cyclicals and Consumer Cyclicals sectors, with a 4-year study period from 2017 to 2020. In addition, a total of 154 companies were selected based on the inclusion criteria, and 616 observations were carried out. This study used data from an emerging market country, namely Indonesia, which was known as the most promising investment destination. The results showed that earnings smoothing did not affect firm value, while earnings informativeness had a significant effect. The relationship between income smoothing and firm value was unaffected by managerial skill, even though it increased the correlation between earning informativeness and firm value. In line with these findings, company leaders must choose managers with high skills in financial management. These skills can greatly influence the impact of earnings informativeness on firm value.

Companies Determinants Of Income Smoothing: Empirical Study Of Property, Real Estate, And Building Construction Sectors Before And In The Time Of Covid 19

This research aims to obtain empirical evidence regarding the effect of financial leverage, profitability, cash holding, and firm value towards income smoothing. Income smoothing is a company’s effort to make earnings less volatile significantly. Stable earnings can be used as a basis for decision-making by stakeholders, while for the company itself, it’s useful for maintaining business continuity and management performance. The object of this research is all companies in the property, real estate, and building construction sector listed on Indonesia Stock Exchange for the 2016-2021 period. Research samples were taken using a purposive sampling method. Secondary data was used in the form of financial reports and stock price information to be tested using the multiple linear regression method. The results of this research are (1) financial leverage has no effect towards income smoothing, (2) profitability has a significant negative effect towards income smoothing, (3) cash holding has no negative effect towards income smoothing, (4) firm value has a significant positive effect towards income smoothing. Financial leverage, profitability, cash holding, and firm value simultaneously have a significant effect towards income smoothing

The Impact of International Financial Reporting Standards on Corporate Governance, Board Size and Income Smoothing in the Nigerian Financial Market

Income smoothing as an accounting technique is an earnings management method that has recently piqued the interest of company boards of directors, accountants, and accounting researchers. Income smoothing is the application of financial reporting principles and standards to level out earnings volatility. This paper focussed on the theoretical investigation of the impact of the International Financial Reporting Standard on corporate governance and income smoothing. This study theoretically examined the link between board size and income smoothing, with an emphasis on the intervening effect of International Financial Reporting Standards (IFRS). This paper covers a period of 2003 to 2023 and which focussed on the Nigerian Financial Market. In this study, a systematic literature review (SLR) was performed, and the research revealed crucial impact of the International Financial Reporting Standard on corporate governance and income smoothing. The SLR was performed using a sample of 100 research articles chosen from a pool of 400 papers obtained from Scopus, Web of Science, Google Scholar, ABS journal and, among other sources. Following the findings of the many research evaluated, the study discovered significant divergence and inconsistency in the results, indicating that corporate governance has either a positive or negative association with income smoothing.

The Effect of Income Smoothing and Dividend Policy on Tax Avoidance in Indonesia

This study aims to examine the effect of earnings smoothing and dividend policy on tax avoidance practices in manufacturing companies listed on the IDX for the 2016-2020 period. This study takes population and samples from financial reports and annual reports of manufacturing companies that contain financial transactions in companies listed on the Indonesia Stock Exchange for the 2016-2020 period. The results of this study indicate that earnings smoothing has a significant effect on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2020 period. Then, dividend policy has a significant effect on tax avoidance found in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2020 period. Furthermore, profit smoothing and dividend policy together have a significant effect on tax avoidance practices.

Impact of Accounting Conservatism on Income Smoothing: Empirical Evidence from Algeria

Abstract This paper investigates the impact of accounting conservatism on income smoothing as a proxy for accounting manipulation. The study used 993 observations for 133 Algerian companies from 2012 to 2020, where income smoothing was measured by the variations in cash flows relative to earnings. However, conservatism was measured through non-operating accounting accruals, accruals-to-earnings ratio before extraordinary items, and allowances. The results showed that total accruals do not impact income smoothing versus positive impacts from non-operating accruals and allowances to income smoothing. Therefore, the study concluded that accounting conservatism facilitates income smoothing in Algerian companies by extending the discretionary room available for managers to manipulate earnings. These results require accounting regulators to consider the role of conservatism in manipulation when setting or amending accounting standards. They also imply that auditors should give more attention to conservative accounting practices to limit the opportunistic behavior of managers and increase the reliability of financial information.

Pengaruh Cash Holding, Ukuran Perusahaan, Nilai Perusahaan Dan Kualitas Audit Terhadap Praktik Perataan Laba

This study refers to problems related to income smoothing practices which are influenced by various factors. In this case, it is interesting for the researcher to conduct another study related to the problem of income smoothing practices. This study aims to determine whether there is a relationship between Cash Holding, firm size, Firm Value and audit quality on income smoothing practices. The analytical method used by the researcher is a logistic analysis method with purposive sampling technique and the data used are annual report data and financial reports for manufacturing companies in the consumer non-cyclicals listed on the Indonesian Stock Exchange (IDX) for the 2018-2022 period. From the results of the research that has been done, it shows that Cash Holding variables, firm size, Firm Value and audit quality have a positive effect on income smoothing practices.

PENGARUH PROFITABILITAS, NILAI PERUSAHAAN DAN LEVERAGE TERHADAP INCOME SMOOTHING PADA PERUSAHAAN CONSUMER CYCLICALS YANG TERDAFTAR DI INDEKS SAHAM SYARIAH INDONESIA (ISSI) TAHUN 2020-2022

This study aims to investigate the effect of Pofitability, Firm Value and Leverage on Income Smoothing in Consumer Cyclicals companies listed on the Indonesian Sharia Stock Index (ISSI) for 2020-2022. This study uses secondary data in the form of company annual reports that are the samples in the study and can be obtained from the Indonesia Stock Exchange's website. Samples were taken using a purposive sampling technique, totaling 21 companies. The data analysis technique used is descriptive statistics, classical assumption test, multiple linear regression analysis, and hypothesis testing. Based on the results of the study, it shows that profitability and leverage partially have a significant effect on Income Smoothing, while Firm Value partially cannot have a significant effect on Income Smoothing. Then simultaneously Profitability, Firm Value, and Leverage can have a significant effect on Income Smoothing. The magnitude of the simultaneous effect is indicated by the R square value of 1.7%.

Analisis Faktor – Faktor Yang Mempengaruhi Income Smoothing Pada Perusahaan Sektor Barang Konsumsi

The purpose of this study was to obtain empirical evidence of the influence of profitability, leverage, cash holding, and dividend payout ratio on income smoothing. The subjects in this study were manufacturing companies in the consumer goods sector listed on the Indonesia Stock Exchange for the period 2016 – 2019. The population in this study amounted to 56 companies and after being selected using the purposive sampling method, the research sample consisted of 19 companies where for four periods, the number of data became 76. Eviews version 12.0 program was used for data processing. The results of research on profitability had no effect on income smoothing, leverage had no effect, cash holding had a significant positive effect, while dividend payout ratio had no effect on income smoothing. The implication of this study is that stable profitability and leverage are needed to reduce income smoothing actions which will provide a good signal for investors.