The Influence of Good Corporate Governance toward Earnings Management

Rizkya Samara Dewi, Bambang Agus Pramuka, Agung Praptapa, Christina Tri Setyorini

Abstract


The purpose of this research is to find out whether some element of good corporate governance can affect
the occurrence of earnings management with audit quality as a moderating variable in manufacturing
companies listed in Indonesian Stock Exchange during 2017-2019. The independent variables include
institutional ownership, independent board of commissioner, and audit committee with audit quality as a
moderating variable. The dependent variable is earnings management which is measured by discretionary
accrual with Modified Jones Model. The population of this research is 193 samples from companies listed
at Indonesian Stock Exchange during 2017-2019. The sampling method used in this research is purposive
sampling method. In addition, the data analysis method used is descriptive statistics, classical assumption
test, multiple regression analysis, and sub-group moderated regression analysis. The result of this research
indicates that the good corporate governance, which is represented by independent board of commissioner
and audit committee have a negative effect while institutional ownership has effect on earnings
management. Audit Quality strengthens the influence of independent board of commissioner on earnings
management. However, audit quality cannot strengthen the influence of institutional ownership and audit
committee on earnings management.
Keyword: Institutional ownership, independent board of commissioner, audit committee, audit quality,
and earnings management.


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