How Corporate Governance Able to Moderate Income Smoothing in Mining Sector

Abstract

Income smoothing has become a phenomenon. It when companies report large profits, people become asked whether this is really real profit or profit that is intentionally made for a particular purpose. Departing from this, we made a study of income smoothing in the mining sector. Mining sector is one sector that is classified as profitable for people; this sector can be called an opportunist and opportunist sector often associated with earnings management and income smoothing. Our research is quantitative research. We use secondary data, financial statements of mining companies for the past five years. We use path analysis for the analysis tools in this study. We use three moderator variables, namely: institutional ownership, managerial ownership and audit committee. We examine the three moderator variables whether they can moderate profitability and leverage on income smoothing. The results of our study state that profitability influences income smoothing. In addition managerial ownership is able to moderate profitability and leverage, while the audit committee is only able to moderate profitability on income smoothing.

Keywords: corporate, governance, income, smoothing, mining, company