THE INFLUENCE OF CORPORATE GOVERNANCE MECHANISM ON EARNINGS MANAGEMENT
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Published:
Nov 12, 2019
Keywords:
Earnings Management, Corporate Governance Mechanism, Company Size, Financial Performance
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Abstract
This research aims to study the relationship between corporate governance mechanism and earnings management. Corporate governance, proxied by institutional ownership and managerial ownership are the mechanism that is expected to reduce this practice by minimizing the agency problem. Earnings management is proxied by absolute discretionary accruals. Control variables are used in this research are company size, Return on Assets and Leverage.
The number of samples used in this research is 70 manufacturing companies which are listed in Indonesia Stock Exchange during three consecutive years 2014-2016, therefore the number of sample companies used during three years is 210. These companies are selected by using purposive sampling technique. The analysis method used in this research is multiple linear regression analysis. The conclusions based on the results indicate that institutional ownership and managerial ownership have negative not significant influence on earnings management, control variables company size has negative significant influence on earnings management, return on assets has positive significant influence on earnings management, and leverage has positive not significant influence on earnings management.
Keywords: Earnings Management, Corporate Governance Mechanism, Company Size, Financial Performance
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Sunata, M., & Haryanto, M. (2019). THE INFLUENCE OF CORPORATE GOVERNANCE MECHANISM ON EARNINGS MANAGEMENT. JURNAL ILMIAH BISNIS, PASAR MODAL DAN UMKM, 2(1), 74-88. Retrieved from https://ibn.e-journal.id/index.php/JIBPU/article/view/122
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References
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Yang, W.S., Chun, L.S., Ramadili, S. M. (2009). The Effect of Board Structure and Institutional Ownership Structure on Earnings Management. Int. Journal of Economics and Management, 3. Retrieved October 2017, http://psasir.upm.edu.my/39469/1/39469.pdf
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Ziv, A. (1998). Discussion of Earnings Management and The Revelation Principle. Review of Accounting Studies 3. Retrieved October 2017, https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/1916/EarningsManage.pdf
Ardison, et al. (2012). The Effect of Leverage on Earnings Management in Brazil. Advances in Scientific and Applied Accounting.Retrieved October 2017, asaa.anpcont.org.br/index.php/asaa/article/download/.../70
Aryani, D.S. (2011). Manajemen Laba Pada Perusahaan Manufaktur Di Bursa Efek Indonesia. Jurnal Ekonomi Dan Informasi Akuntansi (JENIUS), 1.Retrieved October 2017, http://news.palcomtech.com/wp-content/uploads/DWISEPTA-TE01022011.pdf
Aygun, M., Ic, S., Sayim, M. (2014). The Effects of Corporate Ownership Structure and Board Size on Earnings Management: Evidence from Turkey. International Journal of Business and Management, 9. Retrieved October 2017, http://www.ccsenet.org/journal/index.php/ijbm
Boediono, G. S. (2005). Kualitas Laba: Studi Pengaruh Mekanisme Corporate Governance dan Dampak Manajemen Laba Dengan Menggunakan Analisis Jalur. SNA VIII Solo. Retrieved October 2017, https://smartaccounting.files.wordpress.com/2011/03/kakpm-09_2.pdf
Cornier, D. (2013). The Incidence of Corporate Governance and IFRS on Information Asymmetry and the Value Relevance of Earnings: Some Canadian Evidence. Cahier de recherche 2014, 1. Retrieved October 2017, www.cifo.uqam.ca/publications/pdf/2014-01.pdf
Deegan, C. (2014). Financial Accounting Theory. New South Wales: Mc-Graw Hill Education.
Dewi, R.P. (2016). Pengaruh Free Cash Flow, Kinerja Keuangan Terhadap Earnings Management Dimoderasi Corporate Governance. Jurnal Ilmu dan Riset Akuntansi, 5. Retrieved October 2017, https://ejournal.stiesia.ac.id/jira/article/viewFile/1644/1605
Diri, M. E. (2017). Introduction to Earnings Management, Springer International Publishing. New York City: Springer International Publishing.
Ehrhardt, M. C., Brigham, E. F. (2011). Financial Management: Theory and Practice, Thirteen Edition. South-Western Cengage Learning.
Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. Academy of Management Review, 14. Retrieved October 2017, http://www.wiggo.com/mgmt8510/Readings/Readings11/eisenhardt1989amr.pdf
Ghozali, I. (2009). Ekonometrika Teori, Konsep dan Aplikasi dengan SPSS 17. Semarang: Penerbit BPUNDIP.
Grecco, M. C. P. (2013). The Effect of Brazilian convergence to IFRS on earnings managment by listed Brazilian nonfinancial companies. Brazilian Business Review, 10. Retrieved October 2017, https://search-proquest-com.ezproxy.lib.rmit.edu.au/docview/1519970314/fulltextPDF/2E34637A47364764PQ/1?accountid=13552
Hadidi, Y. H., Sutrisno, P. (2017). Pengaruh Motivasi, Struktur Kepemilikan, Kualitas Audit Terhadap Manajemen Laba. Konferensi Ilmiah Akuntansi IV.
Hair, Jr., Black, W. C., Babin, B. J., Anderson, R. E. (2010). Multivariate Data Analysis. New Jersey: Pearson Prentice Hall
Jensen, M. C., Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3. Retrieved October 2017, http://www.sciencedirect.com/science/article/pii/0304405X7690026X
Kouki et al. (2011). Does Corporate Governance Constrain Earnings Management? Evidence from U.S. Firms. European Journal of Economics, Finance and Administrative Sciences, 35. Retrieved from https://www.researchgate.net/profile/Mondher_Kouki/publication/289819574_Does_corporate_governance_constrain_earnings_management_Evidence_from_US_firms/links/586b969008ae8fce4919befa/Does-corporate-governance-constrain-earnings-management-Evidence-from-US-firms.pdf
Ross, S. A., Westerfield, R. W., Jordan, B. D. (2010). Fundamentals of Corporate Finance. New York: Mc-GrawHill/Irwin.
Ronen, J., Yaari, V. (2008). Earnings Management: Emerging Insights in Theory, Practice, and Research. New York City: Springer International Publishing
Soenamo, Y.N. (2016). Earning Management and IFRS Adoption. Retrieved October 2017, 6th Annual International Conference on Accounting and Finance (AF 2016) https://search-proquestcom.ezproxy.lib.rmit.edu.au/docview/1795938644/fulltextPDF/FB6B2042393245A5PQ/1?accountid=13552
Sun, L. (2013). Earnings Management Research: Culture Incentives Versus Accounting Standards Constraints, Some Insights For Future Research. New York: Nova Science Publishers.
Sriwedari, T. (2012). Mekanisme Good Corporate Governance, Manajemen Laba Dan Kinerja Keuangan Perusahaan Manufaktur Di Bursa Efek Indonesia. Jurnal Mediasi, 4. Retrieved October 2017, digilib.unimed.ac.id/416/1/Fulltext.pdf
Tyasari, I. (2009). Asimetri Informasi Dan Praktik Manajemen Laba Pada Perusahaan Manufaktur Di Bursa Efek Indonesia. MODERNISASI, 5. Retrieved October 2017, https://media.neliti.com/media/publications/29678-ID-asimetri-informasi-dan-praktik-manajemen-laba-pada-perusahaan-manufaktur-di-burs.pdf
Ujiyantho, M. A., Pramuka, B.A. (2009). Mekanisme Corporate Governance, Manajemen Laba Dan Kinerja Keuangan. Simposium Nasional Akuntansi X. Retrieved October 2017, https://datakata.files.wordpress.com/2015/01/akpm-01.pdf
Widyastuti, T. (2009). Pengaruh Struktur Kepemilikan dan Kinerja Keuangan Terhadap Manajemen Laba: Studi Pada Perusahaan Manufaktur di BEI. Jurnal Maksi, 9. Retrieved October 2017, eprints.undip.ac.id/35153/
Yang, C. Y., Lai, H. N., Tan, B. L. (2008). Managerial Ownership Structure and Earnings Management. Journal of Financial Reporting and Accounting; Bingley, 6. Retrieved October2017,https://search-proquest com.ezproxy.lib.rmit.edu.au/docview/609936698?OpenUrlRefId=info:xri/sid:primo&accountid=13552
Yang, W.S., Chun, L.S., Ramadili, S. M. (2009). The Effect of Board Structure and Institutional Ownership Structure on Earnings Management. Int. Journal of Economics and Management, 3. Retrieved October 2017, http://psasir.upm.edu.my/39469/1/39469.pdf
Yuliana, A., Trisnawati, I. (2015). Pengaruh Auditor Dan Rasio Keuangan Terhadap Managemen Laba. Jurnal Bisnis dan Akuntansi, 17. Retrieved October 2017, http://www.tsm.ac.id/JBA/JBA17.1Juni2015/4_JBA_Juni_2015.pdf
Ziv, A. (1998). Discussion of Earnings Management and The Revelation Principle. Review of Accounting Studies 3. Retrieved October 2017, https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/1916/EarningsManage.pdf