Related Party Transactions, Family Ownership, and Earnings Management in Indonesia

The purpose of earnings management practice is to reach the profit goals the company wants to achieve. Therefore, this study aims to determine the relationship between related party transactions and earnings management in Indonesia by balanced panel data from consumer goods companies listed on the Indonesia Stock Exchange (IDX) from 2017 to 2019. The number of samples used in this study was 102 firm-year observations. The results showed that related party transactions positively and significantly improved corporate earnings management, with discretionary accrual as a proxy. The presence of family ownership strengthens the relationship between related party transactions and earnings management. Also, it shows that the control variable: public accountant from BIG4, company size, company losses, and ROA affect accrual earnings management. The leverage does not affect accrual earnings management. The study result indicates that family business ownership encourages an entrenchment effect that is detrimental to the company. It is carried out through related party transactions then manipulated by using accrual earnings management practices.DOI: 10.26905/jkdp.v25i3.5778

Tax Incentives Influence On Corporate Earnings: Evidence From Quoted Manufacturing Companies In Nigeria

This study examines the influence of tax incentives on corporate earnings of quoted manufacturing companies in Nigeria. The operational dimension of tax incentives adopted are annual allowance, investment allowance, and tax holiday; while the proxy for corporate earnings is earnings per share (EPS), with share capital as a moderating variable. Secondary data for this study are sourced from financial reports of 69 manufacturing firms quoted on the Nigerian Stock Exchange out of a population of 81 in agriculture, conglomerates, consumer goods, healthcare, industrial goods, natural resources, oil and gas operations. Results from data analysis using descriptive statistics and multiple regression, showed that EPS is influenced by the specified operational dimensions, adjusted R2 = 0.62, p < 0.05. Thus, tax incentives influence corporate earnings in quoted manufacturing companies in Nigeria. It is, therefore, recommended that tax incentives should be sustained by the government to enhance corporate revenue and improve investment. Also, investment booster agencies should do more to coordinate activities, disseminate information on available incentives, and assist investors towards optimum capacity utilization to efficiently drive the Nigerian economy to higher heights.

BEBAN PAJAK TANGGUHAN, LEVERAGE, ASIMETRI INFORMASI TERHADAP MANAJEMEN LABA

The purpose of this study was to examine the effect of deferred tax expense, leverage, and information assimilation on earnings management. This study uses secondary data with a population of companies registered in the Consumer Goods Industrial Sector Manufacturing Companies listed on the Indonesia Stock Exchange for the 2014-2018 period. The method used to determine the sample using purposive sampling. It consists of 18 manufacturing companies in the Consumer Goods industry with 90 samples. The analytical method used is descriptive data analysis. The results of hypothesis testing show that Deferred Tax Expenses have no effect on earnings management, Leverage has a positive effect on corporate earnings management and information assurance has no effect on corporate earningsmanagement.

The impact of debt management on corporate earnings: Indebtedness and its effects on the financial performance of selected Visegrad group enterprises

Research background: One of the significant problems of corporate financial management in the international context is the appropriate determination of the total amount of capital as well as the correct composition of financial sources to finance the activities of enterprises. The determination of the optimal capital structure, and thus the minimization of the costs of capital have been of interest to authors worldwide for several decades, as they can significantly influence the level of corporate earnings. Purpose of the article: The main aim of the paper is to find a mathematical formula to determine whether the indebtedness of an enterprise is related to any financial problems or does not affect the financial performance of an enterprise and thus contributes to the profitability, i.e. if the debt management is performed efficiently. Methods: To find the mathematical formula, we used the financial data of enterprises operating in the selected Visegrad group and calculated the financial ratios of indebtedness, which were further used in the multiple discriminant analysis. The final discriminant function and calculated centroids allow dividing the enterprises into two different groups, with and without financial problems. Findings & Value added: The results of this analysis can be used in the international context to determine the appropriate level of indebtedness also in other countries, not only in the Visegrad group, which may be helpful for corporate financial managers or creditors, because optimal indebtedness helps generate revenues.

Does the corporate life cycle affect earnings management? Evidence from Central European countries

Research background: Earnings manipulations are a global phenomenon, the aim of which is not only to improve the financial position in accordance with Positive Accounting Theory, but also other goals of the company in accordance with the management strategy. However, the diversity of the company’s goals along with the corporate life cycle are crucial factors influencing the quality of corporate earnings and the existence, scope and application of downward and upward earnings management. Purpose of the article: The aim of the paper is to comprehensively analyse and verify the existence and extent of downward and upward earnings management in Central European countries with an emphasis on differences between countries and between life cycle stages. Methods: The study uses Mann-Whitney test and binomial test to verify the existence and extent of downward and upward earnings management. The sample covers discretionary accruals for 2019 estimated by modified Jones and Teoh, et al. models from almost 3,500 companies from four Central European countries. Findings & Value added: The results show that, depending on the life cycle stage or country, companies manipulate profits, but the application of a specific type of earnings management and its scope vary significantly within countries and life cycle stages. Lifecycle manipulation earnings are U-shaped, meaning that start-ups and declining companies use, on average, more significant upward earnings management. On the contrary, mature companies reduce their accounting profit. Nevertheless, the share of companies using upward earnings management is higher than companies with downward earnings management.