INDEKS ECKEL SEBAGAI PENGIDENTIFIKASI PERATAAN PENGHASILAN YANG TIDAK RELIABEL

Abstract

The income smoothing manipulation has a clear objective, which is to produce a steadily growing stream of income. It is mainly a dampening of the variations in income over time. The identification of income smoothing behavior poses no trivial task for the researcher. There have been many of income smoothing studies conducted in Indonesia. Most of them used Eckel’s index for detecting or identifying income smoothing behavior of firms. Earlier empirical studies aimed at ascertaining wheather or not firms intentionally smooth reported income and the determinant that drive management to smooth their income. All studies showed there are firms do behave as if they are smoothing, but inconsistent about factors determining this smoothing. The present study proposes to evaluate the reliability of Eckel’s index. This empirical study used 52 manufacturing firms that listed in Indonesia Stock Exchange (1999 – 2008). The result found the Eckel’s index is not reliablity instrument. It could not capture management’s effort to smooth their income time series. Coeffisient of variation (CV) is constantly changing while the length period is changed.