THE ROLE OF CORPORATE GOVERNANCE  IN CONSTRAINING EARNING MANAGEMENT

This study examines whether corporate governance measured by audit quality, ownership structure, and board of commissioners quality has an effective role in constraining earnings management in Indonesia. The sample of this research is 163 companies in non-financial sectors listed on the Indonesia Stock Exchange in the period 2014-2018. Regression analysis is used to test the research hypothesis. Discretional accruals were used to measure earning management. The results show that the audit firm’s reputation as a proxy of audit quality has a negative significant influence (at the 5% level) on earning management practices. Contrary to the hypothesis, we found that the size of the board of commissioners has a positive significant influence (at the 5% level) on earnings management. These findings provide practical advice for the government and shareholders in providing effective corporate governance mechanisms in constraining earnings management.

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Pengaruh Ukuran Perusahaan Dan Corporate Governance Terhadap Manajemen Laba Di Industri Perbankan Indonesia

Jurnal Ilmiah Akuntansi Kesatuan ◽

10.37641/jiakes.v9i1.487 ◽

2021 ◽

Vol 9 (1) ◽

pp. 111-120

Author(s):

Karina Karina ◽

Sutarti Sutarti

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Audit Committee ◽

Banking Sector ◽

Audit Quality ◽

Stock Exchange ◽

Governance Mechanisms ◽

Audit Firm ◽

Corporate Governance Mechanisms ◽

Size Firm

The purpose of this research is to provide empirical evidence of the affect of ownership concetration, firms size, and corporate governance mechanisms on earnings management. Ownership concetration was measure by the biggest stock of individual or organization, firms size was measure by natural logaritma of net assets, and corporate governance mechanisms were measure by three variabels (composition of board of commisioner, audit quality were measure by industry specialize audit firm, and composition of audit committee). Earnings management was measure by discretionary accruals use Modified Jones Method. The population of this research is 41 companies in the banking sector which were listed in Indonesian Stock Exchange (IDX). The research data were collected from banking companies financial statement for the period of 2016 to 2018. Based on purposive sampling method. The reseacrh hypotesis were tested using multiple regression analysis. The results of this research show that firm size, firm of commissioner and proportion of commissioner have significant relationships with earnings management. Next, variables composition of board of commissioner, ownership concetration and specialize audit firm have no significant relationship with earnings management. Keywords: ownership concetration, firms size, corporate governance, earnings management

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MEKANISME GOOD CORPORATE GOVERNANCE, UKURAN PERUSAHAAN, STRUKTUR KEPEMILIKAN MANAJERIAL DAN LEVERAGE PADA MANAJEMEN LABA PADA EMITEN PERBANKAN DI BURSA EFEK INDONESIA

Jurnal Riset Manajemen dan Bisnis ◽

10.21460/jrmb.2015.101.352 ◽

2015 ◽

Vol 10 (1) ◽

pp. 1

Author(s):

Rowland Pasaribu ◽

Dionysia Kowanda ◽

Muhammad Firdaus

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Firm Size ◽

Audit Committee ◽

Audit Quality ◽

Stock Exchange ◽

Sampling Technique ◽

Earning Management ◽

Managerial Ownership ◽

Good Corporate Governance

ABSTRACT This reseach amied at knowing the influence of audit quality, propotion of independent commissioner, audit committe, firm size, managerial ownership and leverage. It used purposive sampling technique or choosing samples based on certain criteria. The sample of this research was 25 companies of banking industry in indonesia stock exchange period 2008-2012. Descriptive analysis, classical test, as well as multiple linear regression by examining the hypothesis using SPSS 20.0 were used to analyzed the data. The result shows that (1) all independent variables simultaneously hasinfluence on earnings management; (2) however partially audit committee, audit quality, managerial ownership and leverage do not affect significantly to earnings management; (3) only firm size and independent commissioner that affect significantly to earning management. Keywords: Earning Management, Good Corporate Governance, Firm Size, BankingABSTRAK Penelitian ini bertujuan untuk menganalisis dan menguji secara empiris signifikansi parsial dan simultan dari kualitas audit, komisaris independensi audit, komite audit, ukuran perusahaan, struktur kepemilikan, dan leverage terhadap manajemen laba pada emiten perbankan di bursa efek Indonesia periode 2008-2012. Teknik analisis yang digunakan adalah multiregresi. Hasil studi menunjukkan bahwa secara simultan seluruh variabel independen berpengaruh signifikan sedangkan secara parsial hanya ukuran perusahaan dan komisi independensi audit yang berpengaruh signifikan terhadap manajemen laba. Kata Kunci: Manajemen Laba, Mekanisme Tata Kelola, Ukuran Perusahaan, Perbankan,

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The Effect of Good Corporate Governance (GCG) Mechanism on Earnings Management Practices of The Stubben Model (Study Case on Mining Sector Companies Listed on The Indonesia Stock Exchange 2014-2019)

European Journal of Business Management and Research ◽

10.24018/ejbmr.2020.5.6.602 ◽

2020 ◽

Vol 5 (6) ◽

Author(s):

Muhammad Fairus ◽

Pardomuan Sihombing

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Management Practices ◽

Audit Quality ◽

Stock Exchange ◽

Sample Selection ◽

Process Data ◽

Mining Sector ◽

Good Corporate Governance ◽

The Impact

This study was prepared with the intention of analyzing the impact of the Good Corporate Governance (GCG) Mechanism on the Stubben Model of Profit Management (analysis of Mining Sector Companies on the Indonesia Stock Exchange for the period 2014-2019). The population used in the study is the mining sector companies on the IDX. The sample selection method used purposive sampling technique. To process data after sample selection, compile a research model, determine the variables analyzed in the study, and propose a hypothesis, the next step is to carry out data processing procedures through regression analysis with panel data. The results of the analysis conclude that (1) Institutional Ownership has a negative and significant impact on Earnings Management, (2) Managerial Ownership has a negative and significant impact on Earnings Management, (3) The Independent Board of Commissioners has a negative and significant impact on Earnings Management, (4) The Audit Committee has a negative and significant impact on Earnings Management, and (5) Audit Quality has a negative and significant impact on Earnings Management.

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Earnings management determinants: A study of Egyptian listed firm characteristics post the Egyptian revolution

Corporate Governance and Organizational Behavior Review ◽

10.22495/cgobrv5i2sip5 ◽

2021 ◽

Vol 5 (2, special issue) ◽

pp. 165-166

Author(s):

Engy ElHawary ◽

Dina Hassouna

Keyword(s):

Earnings Management ◽

Management Practices ◽

Audit Quality ◽

Stock Exchange ◽

Management Practice ◽

Earning Management ◽

Firm Characteristics ◽

Financial Leverage ◽

Egyptian Revolution ◽

The Relationship

This research aims to look at how firm characteristics and audit quality can affect the earning management practices in the Egyptian context, within the period of 2011–2019. This period was after the Egyptian revolution and has not been well investigated in Egypt, especially after the new release of corporate governance rules for listing firms. A sample of 157 non-financial listed companies in the Egyptian stock exchange is selected for achieving the research objective through analysing their financial reports. The panel least squares, using the fixed-effect model, is used to test the hypotheses and investigate the relationship between discretional accruals and firm characteristics, where the dependent variable is the earnings management, measured by the discretionary accruals and the independent variables are the firm characteristics (size, financial leverage, age, survival and audit quality). The results illustrate that the relationship between a firm’s financial leverage and earnings management is positive. This study may help the firms to control their financial leverage for avoiding any earnings management practice. The stakeholders should notice such significant firm characteristics in making their own decisions, especially after the COVID-19 pandemic crisis, which may expectedly increase the firm financial leverage, and in turn, some earning management practices can be used intentionally to hide the bad firm performance

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Earnings Management, Corporate Governance and Tax Avoidance: The Case in Indonesia

Summer - GATR Journal of Finance and Banking Review ◽

10.35609/jfbr.2017.2.4(4) ◽

2017 ◽

Vol 2 (4) ◽

pp. 28-35

Author(s):

Lulus Kurniasih ◽

Sulardi Sulardi ◽

Sri Suranta

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Audit Quality ◽

Stock Exchange ◽

Tax Avoidance ◽

Governance Mechanisms ◽

Corporate Tax ◽

Effective Tax Rate ◽

Tax Rate ◽

Corporate Governance Mechanisms

Objective - This study aims to determine the effect of earning management and corporate governance mechanisms on corporate tax avoidance. Methodology/Technique - Corporate governance mechanisms use institutional ownership, the size of the board of commissioners, the percentage of independent commissioners, auditing committees, and audit quality as proxies. Meanwhile, earnings management uses the modified Jones model. The sample of this study include non-financial companies that are listed on the Indonesian Stock Exchange (IDX) between 2014 and 2016. Findings - Corporate tax avoidance can be detected by using the effective tax rate (ETR), which is the ratio of income to tax expenses. This sample was chosen using a purposive sampling method, resulting in 871 firms. The results suggest that earnings management has a significant impact on ETR. Novelty - This study identifies that only independent commissioners and audit quality have a significant influence on ETR. Type of Paper - Empirical Keywords: Tax Avoidance; Earnings Management; Corporate Governance; Effective Tax Rate; Audit Quality. JEL Classification: G3, G39, G39.

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Does The Presence Of Independent Directors Influence Accruals Management?

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v25i6.997 ◽

2011 ◽

Vol 25 (6) ◽

Cited By ~ 1

Author(s):

Ramzi Benkraiem

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Ownership Structure ◽

Boards Of Directors ◽

Audit Quality ◽

Stock Exchange ◽

Independent Directors ◽

Accruals Management ◽

Big 4 ◽

Corporate Governance Mechanisms

Recent debates about the functioning of boards of directors have focused on the disciplinary role of independent directors (ID). Evaluating the effectiveness of this role is an interesting empirical question. This study seeks to examine the influence of these directors and two other corporate governance mechanisms, namely the audit quality and the ownership structure, on earnings management as measured by working capital discretionary accruals (WCDAC). The analysis, conducted over a period of 4 years from 2001 to 2004, is based on a sample of 239 different French companies listed on the Paris stock exchange. The findings show that the presence of ID can moderate the management of WCDAC. This role appears to be more effective when these ID make up at least one third of the members of boards of directors, as recommended by the Viénot 1999 report. The Big 4 auditors can also limit this discretionary adjustment. However, no statistically significant relationship was observed between dispersion vs. concentration of ownership structure and WCDAC. This study adds to the limited research into the relationship between corporate governance and earnings management in France. It also gives empirical evidence on the effectiveness of the Viénot 1999 report’s recommendations. Thus, it should be of interest to academics as well as regulators in preparing and amending corporate governance laws.

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Effect of Good Corporate Governance (GCG) Mechanism on Earning Management Practices and the Impact on Stock Returns (Case Study on LIQUID (lQ 45) Companies Listed in Indonesia Stock Exchange Period 2013-2017)

Business and Management Studies ◽

10.11114/bms.v5i3.4313 ◽

2015 ◽

Vol 5 (3) ◽

pp. 11

Author(s):

M. Noor Salim ◽

M. Rusman HN

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Stock Returns ◽

Audit Committee ◽

Management Practices ◽

Stock Exchange ◽

Institutional Ownership ◽

Earning Management ◽

Managerial Ownership ◽

Good Corporate Governance

This study aims to analyze the effect of the mechanism of good corporate governance (GCG) on earnings management practices and their impact on stock returns. The population used in this study is the companies included in the go public LQ 45 group listed on the Indonesia Stock Exchange in 2017. The analytical tool used in this study is Eviews software version 8.0. The results of the analysis in this study indicate that (1) Institutional Ownership has a negative and significant effect on Earning Management Practices, (2) Managerial Ownership has a negative and significant effect on Earning Management Practices, (3) Independent Board of Commissioners has a negative and significant effect on Earnings Management, (4) The Audit Committee has a negative and significant effect on Earning Management Practices, (5) Institutional Ownership, Managerial Ownership, Independent Board of Commissioners and Simultaneous Audit Committee (Together) have a significant effect on earnings management, (6) Earning Management Practices have a negative and significant effect on stock returns(7) Institutional Ownership has a positive and significant effect on stock returns, (8) Managerial ownership has a positive and significant effect on stock returns, (9) The Independent Board of Commissioners has a positive and significant effect on stock returns, (10) The Audit Committee has a positive and significant to stock returns, and (11) Earning Management is able to mediate the influence of Institutional Ownership, Managerial Ownership, Independent Board of Commissioners, and the Audit Committee simultaneously (jointly) on Stock Returns. It is recommended that the LQ45 company increase the portion of Institutional ownership as part of a supervision for management in managing the company so as to increase stock returns on an ongoing basis.

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Can corporate governance mechanisms reduce earnings-management practices in Islamic banks?

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-04-2019-0081 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Virasty Fitri ◽

Dodik Siswantoro

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Audit Committee ◽

Management Practices ◽

Stock Exchange ◽

Islamic Banks ◽

Governance Mechanisms ◽

Loan Loss ◽

Content Type ◽

Corporate Governance Mechanisms

Purpose This study aims to provide empirical evidence on the role of corporate governance mechanisms in reducing earnings-management practices in Islamic banks in Asia. Design/methodology/approach This study used 28 Islamic banks in Asia, which were listed on the stock exchange from 2013–2017. The research method used quantitative regression with data on the characteristics of Islamic banks taken from the websites of each bank. This study used discretionary loan loss provision as a proxy for measuring earnings management. Findings The results show that only the audit committee size has a significantly negative effect on earnings management. An independent audit committee has a negative, but not significant, effect. The difference expectation signs cannot be interpreted further. Research limitations/implications Only a few components of corporate governance were tested in this study. Therefore, it is expected that future studies will include more components. Practical implications In general, the components of corporate governance that include the characteristics of the board of directors and the audit committee have a varied effect on reducing the earnings-management practices in Islamic banks, except audit committee size. In practice, audit committee size should have an important role in earning management reduces. Originality/value This may be the first paper that studies the effect of corporate governance on earnings management in Islamic banks in Asia.

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Free Cash Flow And Earnings Management: The Moderating Role Of Governance And Ownership

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v32i1.9536 ◽

2015 ◽

Vol 32 (1) ◽

pp. 255 ◽

Cited By ~ 6

Author(s):

Mehdi Nekhili ◽

Ines Fakhfakh Ben Amar ◽

Tawhid Chtioui ◽

Faten Lakhal

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Cash Flow ◽

Audit Committee ◽

Management Practices ◽

Audit Quality ◽

Free Cash Flow ◽

Governance Mechanisms ◽

Corporate Governance Mechanisms

The purpose of this paper is to analyze the moderating effect of corporate governance and ownership features in lessening earnings management practices in a free cash flow (FCF) situation. A simultaneous equations model is developed to address endogeneity of the FCF variable. Based on a sample of French companies belonging to the SBF 120 index from 2001 to 2010, the results highlight the opportunistic behavior of managers in presence of free cash flows. Particularly, managers engage in earnings management practices that increase reported earnings. Our results also show that corporate governance mechanisms such as audit committee independence and external audit quality, in addition to institutional investors and managerial ownership reduce the extent of earnings management. Corporate governance mechanisms are substitutive in their monitoring role of managers’ behavior to reduce earnings management in presence of a free cash flow problem.

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Corporate Governance, Audit Quality, Family Ownership and Earnings Management

KnE Social Sciences ◽

10.18502/kss.v5i5.8839 ◽

2021 ◽

Author(s):

Ari Kuncara Widagdo ◽

Rahmawati Rahmawati ◽

Sri Murni ◽

Trisninik Ratih Wulandari ◽

Sri Wahyu Agustiningsih

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Information Asymmetry ◽

Family Firms ◽

Management Practices ◽

Audit Quality ◽

Stock Exchange ◽

Family Ownership ◽

Manufacturing Companies ◽

Management Actions

This study aimed to obtain empirical evidence regarding the influence of corporate governance and audit quality on earnings management measures, as well as their relationship with the effect of family ownership. Research on earnings management has been widely conducted, but research in family firms is still limited, while based on previous observational data, 95% of companies in Indonesia are family firms. In addition, the difference in the concept of corporate governance in developing countries compared to developed countries is crucial in relation to company supervision patterns. Earnings management practices carried out by company management can be caused by the occurrence of information asymmetry in which management as an agent has more information related to the company than the company owner. This information asymmetry is used by managers to mislead other parties with the aim of increasing their managerial career or compensation. Implementing the corporate governance mechanism is a way to reduce earnings management. Another factor affecting earnings quality is audit quality. This study took a sample of manufacturing companies listed on the Indonesian Stock Exchange during the 2017- 2018 period. 152 sample data were tested. This study used secondary data obtained from annual reports of companies listed on the Indonesian Stock Exchange. Moderated regression analysis (MRA) was used. Corporate governance had no effect on earnings management and audit quality had a significant effect on earnings management behavior. Family ownership was able to strengthen the effect of audit quality in determining earnings management actions. Keywords: corporate governance, audit quality, earnings management, family ownership

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