The Impact of Audit Standards, Firm Features, and Share Ownership on Earnings Management Techniques
Authors
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Happy Sista Devy
Financial Management, Syariah of Economics, Pekalongan State Islamic Institute, Pekalongan, Indonesia
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Rama Andriansa
Department of Management, Business Economics, Sebelas Maret University, Surakarta, Indonesia
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Ibrahim Rahman Turay
Ernest Bai Koroma University of Science and Technology is one of the public universities in Sierra Leone, West Africa
DOI:
https://doi.org/10.69725/ami.v1i1.94
Keywords:
Earnings Management, Corporate Governance, Audit Quality, Ownership Structure, Indonesia Stock ExchangeAbstract
Purpose: This study investigates the impact of ownership structure, corporate characteristics, and audit quality on earnings management practices among non-financial firms listed on the Indonesia Stock Exchange (IDX) between 2018 and 2023.
Methods: The research examines non-financial companies listed on the Indonesia Stock Exchange (IDX) between 2018 and 2023. The impact of various independent variables on discretionary accruals is investigated through the use of a multiple regression model analysis
Findings: Significant positive relationships were found between company growth, performance, and firm age with discretionary accruals, indicating that firms experiencing higher growth and performance, as well as older firms, are more likely to engage in earnings manipulation. Firm size also showed a positive, though marginally significant, effect on discretionary accruals. However, audit quality, board size, managerial ownership, and institutional ownership did not exhibit significant impacts on earnings management.
Novelty: This study contributes to the literature by providing updated insights into how various corporate and ownership characteristics influence earnings management in the Indonesian market, highlighting the nuanced roles of audit quality and governance structures.
Implications: The findings suggest that enhancing corporate governance frameworks and focusing on internal control mechanisms may be more effective in curbing earnings manipulation than solely relying on audit quality or ownership structures. This has practical implications for regulators and firms aiming to improve financial reporting standards and transparency.
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References
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