scholarly journals Motive behind Earnings Management Practices: Case in Public Property and Real Estate Companies in Indonesia

2020 ◽  
Vol 12 (1) ◽  
pp. 49
Author(s):  
Alwan Sri Kustono
Keyword(s):  
Real Estate ◽  
Earnings Management ◽  
Hypothesis Testing ◽  
Management Practices ◽  
Financial Statements ◽  
Public Companies ◽  
Public Property ◽  
Real Estate Sector ◽  
Testing Data ◽  
Stage Analysis

This study examines the antecedents and consequence variables of earnings management. This study is expected to explain the motive of earnings management practices by public property and real estate companies in Indonesia: opportunistic or efficient. The theory which is the basis for developing the hypotheses ise agency, positive accounting, and signaling theories simultaneously. This study is explanatory research which aims to explain the causal relationship between variables through hypothesis testing. Data of this research are financial statements of public companies in the property and real estate sector in Indonesia (2014-2018) with some criteria. There are 60 firm-years data used in the analysis. Hypothesis testing uses multiple linear regression two-stage. The first stage analysis is used to examine the effect of the antecedent earnings management variable. Regression second stage test the consequences of earnings management practices. The results show debt and independent commissioners affect earnings management. Management performs more dominant earnings management because of opportunistic interests than to maintain market value and the interests of its     shareholders. The implication of this research is to provide a comprehensive discourse on the motives for earnings management behavior in Indonesia. 

scholarly journals ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI KETEPATAN WAKTU PENYAMPAIAN LAPORAN KEUANGAN PADA PERUSAHAAN PROPERTI DAN REAL ESTATE YANG TERDAFTAR DI BEI PERIODE 2016-2018

2020 ◽  
Vol 12 (1) ◽  
pp. 96-108
Author(s):  
Mariya Ulfah ◽  
Penta Widyartati
Keyword(s):  
Real Estate ◽  
Hypothesis Testing ◽  
Stock Exchange ◽  
Financial Statements ◽  
Financial Statement ◽  
Company Size ◽  
Financial Reports ◽  
Public Companies ◽  
Significance Level ◽  
The Government

Timeliness of financial statements has been regulated by the government in accordance with regulations issued by the Otoritas Jasa Keuangan (OJK) which states that public companies are required to submit financial reports no later than the fourth month after the financial year ends. But some companies that are not timely in presenting their financial statements. This study aims to find empirical evidence about the influence of company size, liquidity, profitability, leverage, auditor's opinion, and KAP's reputation on the timeliness of financial statement submission. The population in this study are property and real estate sub-sector services companies listed on the Indonesia Stock Exchange (Bursa Efek Indonesia (BEI)) for the period of 2016-2018, as many as 47 companies. The sample in this study were 35 companies taken by purposive sampling method. The dependent variable is, the timeliness of financial statement submission. While the independent variables in this study are company size, liquidity, profitability, leverage, auditor's opinion, and KAP's reputation. Data collection methods using the method of library research and documentation methods. Hypothesis testing uses logistic regression at a significance level of 5 percent. The results of hypothesis testing indicate that firm size variables significantly influence the timeliness of financial statement submission with a significance value of 0.024 <0.05. Liquidity variable does not affect the timeliness of financial statement submission with a significance value of 0.437> 0.05. The profitability variable does not affect the timeliness of financial statement submission with a significance value of 0.753> 0.05. The leverage variable does not affect the timeliness of the delivery of financial statements with a significance value of 0.512> 0.05. The auditor's opinion variable has a significant effect on the timeliness of the delivery of the financial statements with a significance value of 0.025 <0.05. KAP reputation variable does not affect the timeliness of financial statement submission with a significance value of 0.998> 0.05.

Financial Distress, Earnings Benchmark and Earnings Management Practices

2021 ◽  
pp. 097226292110109
Author(s):  
Karan Gandhi
Keyword(s):  
Panel Data ◽  
Earnings Management ◽  
Financial Distress ◽  
Management Practices ◽  
Real Earnings Management ◽  
Public Companies ◽  
Large Panel ◽  
Distressed Firms ◽  
Contradictory Evidence ◽  
Financially Distressed

Prior research exhibits contradictory evidence on earnings management practices, both accrual and real, undertaken by the firms in state of financial distress. This study uniquely examines the issue in the presence of earnings-increasing earnings management motivation- meeting earnings benchmark of avoiding losses. For examining the issue, this study analyzes large panel data of Indian public companies for the period 2000–2016. The findings indicate prevalence of earnings-decreasing real earnings management practices, that is, decrease in overproduction and increase in spending on discretionary expenses, in financially distressed firms despite there being motivation to increase earnings to avoid losses. No evidence of accrual earnings management practices has been observed in such firms.

Earnings management in non-public companies: the case of for-profit hospice organizations

2017 ◽  
Vol 29 (1) ◽  
pp. 1-19
Author(s):  
Kelly Noe ◽  
Dana A. Forgione ◽  
Pamela C. Smith ◽  
Hanni Liu
Keyword(s):  
Earnings Management ◽  
Financial Statements ◽  
Accounting Earnings ◽  
Public Companies ◽  
For Profit ◽  
Management Literature ◽  
Political Cost ◽  
Accounting Earnings Management ◽  
Public Scrutiny ◽  
Cost Factors

We examine earnings management in non-publicly listed companies, with a focus on for-profit (FP) hospice organizations, and extend the accounting earnings management literature to the hospice industry. FP hospice organizations file Medicare cost reports that include complete financial statements not otherwise publicly available. Managers of FP hospice organizations have incentives to manage earnings to increase performancebased bonuses, meet or beat bond covenant requirements, or avoid public scrutiny. We find total accruals are significantly positively associated with profitability, debt, and size factors. However, discretionary accruals are significantly negatively associated with debt and size, but not profitability. Thus, monitoring and political cost factors appear to effectively mitigate earnings management in this industry sector.

scholarly journals The Impact of Earnings Management on Stock Returns for Listed Industrial Firms on the Amman Stock Exchange

2019 ◽  
Vol 9 (3) ◽  
pp. 1
Author(s):  
Ahmed M. Al Omush ◽  
Walid M Masadeh ◽  
Rasha M. Zahran
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Management Practices ◽  
Stock Exchange ◽  
Financial Statements ◽  
Industrial Firms ◽  
Significance Level ◽  
Amman Stock Exchange ◽  
Study Population ◽  
Operating Cash Flow

This study aims to investigate the impacts of earning management on the stock returns of listed industrial firms on the Amman Stock Exchange, with the observance of (firm size and operating cash flow) as control variables for the study. In order to fulfill the purposes of this study, the researcher utilized (Jones model) and (Modified Jones model) to measure earning management through reliance on discretionary accruals as evidence of earnings management practices, and utilize (Market Return On the Stock model) to measure stock returns, and the study population was Mining and Extraction Industries firms also Food and Beverages firms listed in Amman Stock Exchange, the study was conducted on a sample of 18 firms which represents 75% of the study population for the period from 2014 to 2018, In addition to using descriptive and analytical approach to data collection, analysis, and testing hypotheses through financial statements of the firms in the study, the researcher has used the Statistical Package for Social Sciences (SPSS) program to test the hypotheses. This study creates many results some of which are: there is an insignificant relationship between earnings management practices and stock returns for listed industrial firms in Amman Stock Exchange during the study period at the significance level of 5%, Which reflects the poor efficiency in Amman Stock Exchange and not the information contained in the financial statements issued and therefore not impact stock prices, which in turn affects the stock returns, and there is an insignificant relationship between stock returns and operating cash flow at the level of significance of 5%, In addition found significant correlation between firm size and stock returns at the significance level of 1%. The researcher presented a set of recommendations; the following are most valuable: the importance of increasing the awareness of the relevant parties about the unreliability of financial statements issued by industrial companies listed on the Amman Stock Exchange in existence of the earnings management practice and not reflecting the information contained in the financial statements on prices and stock returns by holding seminars, conferences and meetings also Activating the role of audit committees further to be able to detect the practice of earnings management and decrease it.

Board gender diversity, corporate governance, and earnings management

2019 ◽  
Vol 35 (1) ◽  
pp. 37-60 ◽  
Author(s):  
Nurlan Orazalin
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Management Practices ◽  
Gender Diversity ◽  
Policy Implications ◽  
Annual Reports ◽  
Public Companies ◽  
Content Type ◽  
Weak Evidence ◽  
Board Gender Diversity

Purpose The purpose of this study is to examine whether board gender diversity and other board characteristics affect earnings management practices of top public companies in Kazakhstan. Design/methodology/approach The study analyzes data of top public companies for the period 2010-2016. Data on corporate governance were manually collected from annual reports and investment memorandums, and financial data were collected from audited financial statements. Findings The empirical results show that companies with greater board gender diversity are more effective in constraining earnings management. The findings also indicate that companies with larger boards adopt a more restrained approach to earnings management practices, thus supporting the theoretical framework of the study. However, the results provide weak evidence of the association between board independence and earnings quality. Originality/value This study is the first to investigate the relationship between gender diversity and earnings management in emerging markets such as Kazakhstan that offers managerial and policy implications.

Does Earnings Management Affect Firms’ Investment Decisions?

2008 ◽  
Vol 83 (6) ◽  
pp. 1571-1603 ◽  
Author(s):  
Maureen F. McNichols ◽  
Stephen R. Stubben
Keyword(s):  
Earnings Management ◽  
Investment Decisions ◽  
Financial Statements ◽  
Fixed Asset ◽  
Public Companies ◽  
Large Sample

ABSTRACT: This paper examines whether firms manipulating their reported financial results make suboptimal investment decisions. We examine fixed asset investments for a large sample of public companies during the 1978–2002 period and document that firms that manipulate their earnings—firms investigated by the SEC for accounting irregularities, firms sued by their shareholders for improper accounting, and firms that restated financial statements—over-invest substantially during the misreporting period. Furthermore, following the misreporting period, these firms no longer over-invest, consistent with corrected information leading to more efficient investment levels. We find similar patterns for firms with high discretionary revenues or accruals. Our findings suggest that earnings management, which is largely viewed as targeting parties external to the firm, can also influence internal decisions.

scholarly journals PRAKTIK EARNING MANAGEMENT DAN PENGARUHNYA TERHADAP KOMPENSASI BONUS

2020 ◽  
Vol 3 (1) ◽  
pp. 100
Author(s):  
Siti Zubaidah
Keyword(s):  
Panel Data ◽  
Earnings Management ◽  
Management Practices ◽  
Hypothesis Test ◽  
Financial Statements ◽  
Test Method ◽  
Earning Management ◽  
Business Unit ◽  
Business Units ◽  
Business Entities

The purpose of this study is to identify earning management practices and analyze the effect of earnings management on bonus compensation. The object of research uses the Business Entity and Sharia Business Unit. The selected sample is 34 companies. Variables used are earnings management and bonus compensation. Data is collected through documentation in the form of financial statements of Business Entities and Sharia Business Units in 2017 and 2018. This study uses a hypothesis test. The test method used is panel data test using EViews 10 software. The results showed that the practice of earning management in Sharia Business Entities and Business Units is mostly done by income maximalization or increasing profit (50%) and income minimizasion or decreasing profit (50%), and there is a significant influence between earning management practices and bonus compensation.

scholarly journals Public Accountants’ Perceptions Of The Acceptability Of Earnings Management Practices Through The Employment Of GAAP In The Post-Sox Period

2010 ◽  
Vol 26 (1) ◽  
Author(s):  
John E. McEnroe
Keyword(s):  
Earnings Management ◽  
Management Practices ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Font Size ◽  
Generally Accepted Accounting Principles ◽  
Sarbanes Oxley ◽  
Accounting Scandals ◽  
Audit Opinions ◽  
Certification Requirements

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Over fifteen years ago, Martens and McEnroe (1992) conducted a behavioral study involving earnings management through the use of Generally Accepted Accounting Principles (GAAP). Their findings indicated that auditors issued unqualified audit opinions on those financial statements and perceived little risk to litigation as a result. A decade later they conducted a similar study (Martens and McEnroe 2002) with the expectation that increased attention to earnings management by then chairman of the Securities and Exchange Commission (SEC), Arthur Levitt, would reduce auditors’ perceptions that the letter of GAAP is in itself an aegis or “safe harbor” against litigation. Although the authors found that auditors had become more conservative, they still issued unqualified opinions on financial statements in which transactions were reported in their form rather than their substance. Given the accounting scandals of Enron and WorldCom, among others, and the enactment of the Sarbanes-Oxley Act (SOX) in 2002, especially with its officers’ certification requirements, it was posited that auditors would exhibit a much more conservative approach than in either of the two previous studies. The results indicate that although auditors are more conservative than in the 1992 study, they still allow clients to engage in earnings management practices through the use of GAAP by issuing unqualified audit opinions on their financial statements. <strong style="mso-bidi-font-weight: normal;"></strong></span></span></p>

scholarly journals The Effect Of Non-Performing Financing (NPF) On Earnings Management Practices In Islamic And Conventional Bank

2019 ◽  
Vol 7 (1) ◽  
Author(s):  
Erika Eriyanti ◽  
Rianti Pratiwi ◽  
Muhammad Doddy
Keyword(s):  
Business Ethics ◽  
Earnings Management ◽  
Management Practices ◽  
Financial Statements ◽  
Financial Reports ◽  
Islamic Bank ◽  
Panel Data Regression ◽  
Management Procedures ◽  
Islamic Business Ethics ◽  
Conventional Bank

This study aims to examine the effect of Non-Performing Financing (NPF) to Earnings Management Practices in Islamic Bank and Conventional Bank.  Earnings management procedures are still regarded legal when they do not conflict with General Accepted Accounting Principles (GAAP), but when viewed from an Islamic perspective, particularly in Islamic business ethics and sharia management, earnings management practices are regarded to be incompatible with the principles contained in Islamic business ethics and sharia management.The data collection of this research uses documentation technique from financial reports of Islamic bank and conventional bank. The analytical method which is used in this study is panel data regression. This study found that the Non-Performing Financing (NPF) have a significant positive effect with Earnings Management. For the implication, investors and other financial statements customers are anticipated to be more cautious in evaluating financial statements. For business institutions, especially sharia business institutions, the principles of Islamic business ethics should always be instilled in carrying out their operations.

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