Factors Affecting Income Smoothing Among Listed Companies in Singapore

The objective of this study is to identify the factors associated with the incidence of income smoothing. The sample comprises 153 companies listed in the Singapore stock exchange during the period 1980 to 1990. Descriptive statistics indicate that income smoothing is practised and that operational income is the most common income smoothing objective. Four hypotheses relating income smoothing to company size (total assets), profitability (net income after tax to total assets), industry (industrial and commercial, hotels and properties, and others), and nationality (Singaporean and Malaysian companies) are tested in the study. Results from t-tests of differences, chi-square tests of independence, and logit analyses largely support the alternative hypotheses put forward except for company size. The primary findings are that income smoothers tend to be less profitable companies, companies in more ‘risky’ industries, and Malaysian companies. It is hoped that this study, which is conducted in an economically and a culturally different context from all existing studies, can contribute towards the current literature on income smoothing.