Does the change of income tax rates lead to income smoothing practices in a sound corporate governance environment?
by Martin Surya Mulyadi; Yunita Anwar; Monica
International Journal of Business Excellence (IJBEX), Vol. 15, No. 2, 2018

Abstract: Income smoothing alters revenues from one year to another due to several motivations. Prior research has documented that taxation issues may motivate a company to smooth its income. Furthermore, it has been well documented that corporate governance can avoid income smoothing practices. However, on the contrary, we did not find that the change of income tax rates in Indonesia and Singapore leads to income smoothing in both countries. Furthermore, we also conclude that only selected corporate governance mechanism serves as an effective barrier to income smoothing practices. We also found several contrary findings of corporate governance mechanism that may be caused by a big number of publicly listed family companies both in Indonesia and Singapore.

Online publication date: Mon, 21-May-2018

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