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The Effect of International Financial Reporting Standars on the Real Earnings Management and Internal Control Structure as a Moderating Variable

Author

Listed:
  • Theresia Dwi Hastuti

    (Faculty of Economics and Business, Department of Accounting, Soegijapranata University Semarang, Indonesia)

  • Imam Ghozali

    (Department of Accounting, Faculty of Economics and Business, Diponegoro Universtiy, No. 17, Jl. Erlangga Tengah, Semarang, Indonesia,)

  • Etna Nur Yuyetta

    (Faculty of Economics and Business, Diponegoro Universtiy, No. 17, Jl. Erlangga Tengah, Semarang, Indonesia.)

Abstract

Earnings management has become a widely known phenomenon towards managing reported earning in order to fulfill targets. Scott (1997) defines earnings management as a management choice upon accounting policy, or a real activity that affects earnings as such that multiple objectives of the specific earnings reporting can be obtained. The perspective of financial statement contends that a manager uses earnings management to match financial analyst's forecast with the objective of avoiding perception and negative reaction, which in turn brings impact on stock price. This study aimed to examine the effect of International Financial Reporting Standards (IFRS)-based accounting standard on the real earnings management (REM) moderated by internal control structure. Samples for the study were manufacture companies listed in the Indonesian Stock Exchange 2010-2014. The study found that adoption of the IFRS-based accounting standard had a positive effect on the REM and good corporate governance proxied by internal control structure weaken the positive effect of the IFRS-based accounting standard adoption on the REM.

Suggested Citation

  • Theresia Dwi Hastuti & Imam Ghozali & Etna Nur Yuyetta, 2016. "The Effect of International Financial Reporting Standars on the Real Earnings Management and Internal Control Structure as a Moderating Variable," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1807-1814.
    • Handle: RePEc:eco:journ1:2016-04-70
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    References listed on IDEAS

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    2. Bailey, Wendy J. & Sawers, Kimberly M., 2018. "Moving toward a principle-based approach to U.S. accounting standard setting: A demand for procedural justice and accounting reform," Advances in accounting, Elsevier, vol. 43(C), pages 1-13.

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    More about this item

    Keywords

    Real Earnings Management; International Financial Reporting Standards; Good Corporate Governance; Internal Control Structure;
    All these keywords.

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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