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Corporate Governance, Audit Quality, Firm Size and Leverage: Their Effect on Earnings Management

Author

Listed:
  • Andry Priharta

    (Faculty of Economics and Business, Universitas Muhammadiyah Jakarta.)

  • Nur Asni Gani

    (Faculty of Economics and Business, Universitas Muhammadiyah Jakarta.)

  • Jaharuddin Jaharuddin

    (Faculty of Economics and Business, Universitas Muhammadiyah Jakarta.)

  • Rony Edward Utama

    (Faculty of Economics and Business, Universitas Muhammadiyah Jakarta.)

Abstract

The objectives of this research are to estimate and analyze the effect of corporate governance, audit quality, firm size, and leverage on earnings management, either partially or simultaneously. The research method used is panel data regression analysis. Purposive sampling approach was used, choosing six companies that consistently participated in the Corporate Governance Perception Index (CGPI) program from 2014 to 2019 and are listed on the Indonesia Stock Exchange. The results show that CGPI has a significant negative effect, audit quality has no significant effect, firm size has a significant negative effect, leverage has a significant positive effect on earnings management. CGPI, audit quality, firm size, and leverage simultaneously have a significant effect on earnings management with a coefficient of determination (R2) of 0.7936, indicating that all independent variables can explain variations in earnings management by 79.36%, while the remaining 20. 64% is explained by other factors not to be included in the model.

Suggested Citation

  • Andry Priharta & Nur Asni Gani & Jaharuddin Jaharuddin & Rony Edward Utama, 2022. "Corporate Governance, Audit Quality, Firm Size and Leverage: Their Effect on Earnings Management," Technium Social Sciences Journal, Technium Science, vol. 38(1), pages 478-484, December.
    • Handle: RePEc:tec:journl:v:38:y:2022:i:1:p:478-484
    DOI: 10.47577/tssj.v38i1.7752
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    References listed on IDEAS

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    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Liu, Qiao & Lu, Zhou (Joe), 2007. "Corporate governance and earnings management in the Chinese listed companies: A tunneling perspective," Journal of Corporate Finance, Elsevier, vol. 13(5), pages 881-906, December.
    3. Cornett, Marcia Millon & McNutt, Jamie John & Tehranian, Hassan, 2009. "Corporate governance and earnings management at large U.S. bank holding companies," Journal of Corporate Finance, Elsevier, vol. 15(4), pages 412-430, September.
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    More about this item

    Keywords

    Audit Quality; CGPI; Earnings Management; Firm Size; Leverage.;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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