Institutional Repository | Satya Wacana Christian University: Fenomena Perataan Laba Di Indonesia: Garbling Vs Signalling

Abstract
The purpose of this study is to analyze whether the phenomenon of income
smoothing in Indonesia is signalling or garbling. The sample in this study was 10
manufacture companies which released financial statement since 2010-2012 and
published obligation.
Using Tucker and Zarowin’s income smoothing statistic, this study
discovered companies with high level of income smoothing and companies with
low level of income smoothing. Descriptive statistic test with mean, maximum
and minimum analysis tools were used in this study to analyze the difference
between companies with high yield and companies with low yield and to analyze
the difference of company characteristics of companies with signaling income
smoothing and companies with garbling income smoothing.
Study results showed that the income smoothing phenomenon in Indonesia
tended to be garbling. It showed that investors in Indonesia were more selective in
making investment decision.
Keywords: income smoothing, cost of debt, garbling, signalling, profit