Profitability Effect on Smoothing of Income with Size of Firm as Moderating Variable in Manufacturing Corporates

Abstract

Empirically, this research examines the effect of profitability on income smoothing practices with the moderating variable of firm size in the manufacturing industry during the 2017-2019 period which is listed on the Indonesia Stock Exchange. 75 data used in this research were selected 225 data using purposive sampling method with a total during the research period. Financial statements are the data used in this research. Econometric view software (EViews) version 10 was used to process the data. The results showed that net profit margin had a significant positive effect on income smoothing practices, return on equity had a significant negative effect. Moderating variable Firm size has no significant effect on the relationship between net profit margins and income smoothing practices as well as on the relationship between return on equity and income smoothing practices.