The Impact of Non Linier of Prudence to Relationship of Audit Committee Mechanism on Income Smoothing

Abstract

The purpose of this research is to obtain empirical certainty about the relationship between the audit committee mechanism and income smoothing, and the audit mechanism in this research is seen from its size, independence, expertise, and the number of meetings held by the audit committee during one financial reporting period. Because previous research still shows inconsistent results, this research adds prudence as a moderating variable. Taking research samples using the purposive sampling method, namely companies depending on LQ-45 for the period August 2023, with the year of observation from 2018 - 2021. The existence of a moderating variable requires researchers to use Moderated Regression Analysis. Before being regressed, the model was declared not subject to the three classical assumption tests. Thus, the empirical evidence that can be provided is that the size of the audit committee has a significant negative effect on income smoothing, while independence, expertise and meetings have no effect on income smoothing. Prudence only strengthens the relationship between audit committee size and independence on income smoothing and is unable to moderate the relationship between expertise and number of meetings on income smoothing.