What type of study is this?

This is a Logistic Regression study (also classified as: Moderating Analysis, Observational).

September 10, 2025Open Access

The Role of Moderating Audit Quality on Income Smoothing

IWIrma WidyawatiMuhammadiyah University of Surakarta RTRina TrisnawatiMuhammadiyah University of Surakarta

Key Points

Income tax positively impacts income smoothing, while cash holding and dividend policy do not influence it.
The study sample includes 158 companies listed in the LQ 45 index on the Indonesia Stock Exchange over five years.
Logistic regression and moderating analysis techniques were employed for data evaluation.
Findings suggest that audit quality significantly moderates the impact of financial policies on income smoothing.

Abstract

This study seeks to provide empirical data on the impact of cash holding, income tax, and dividend policy on income smoothing with audit quality as moderation in companies included in the LQ 45 index traded on the Indonesia Stock Exchange from 2019 to 2023. Based on the purposive sample method, sample of 158 companies was obtained within 5 years of research. Logistic regression and moderating analysis are used as data analysis techniques in this study. The findings of this study prove that income tax has a positively affects income smoothing, however cash holding and dividend policy do not impact on income smoothing. Furthermore, on basis of contingency theory, this study utilizes the audit quality metric score which comprises audit firm size, audit firm industry specialization, audit tenure, client importance, and going-concern audit opinion. This study empirically reveals that audit quality can moderating the effect of cash holding and dividend policy on income smoothing. Keywords: Cash Holding; Income Tax; Dividend Policy; Income Smoothing; Audit Quality

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