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Company Characteristics, Corporate Governance, Audit Quality Impact on Earnings Management

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  • Friska Firnanti

    (Accounting, Trisakti School of Management, Indonesia Author-2-Name: Kashan Pirzada Author-2-Workplace-Name: Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia, Kedah, Malaysia Author-3-Name: Budiman Author-3-Workplace-Name: Trisakti School of Management, Kyai Tapa No. 20, 11440, Jakarta, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - The purpose of this research is to empirically examine how company characteristics, corporate governance and audit quality affect earnings management. Methodology/Technique - The population used for this research is manufacturing companies listed on the Indonesian Stock Exchange between 2013 and 2015. The sampling method used in this research is purposive sampling. 64 companies are examined, with 192 items of data being obtained. Finding - This research also uses statistical testing through a multiple regression. The results show that return on assets, financial leverage, free cash flow, and sales growth all have an influence on earnings management. Meanwhile, other variables such as managerial ownership, institutional ownership, board size, the presence of an audit committee, firm size, and audit quality have no significant effect on earnings management. Novelty - In this research, company characteristics are proxied with the return on assets, financial leverage, firm size, free cash flow, and sales growth, while corporate governance is proxied with managerial ownership, institutional ownership, board size, and the presence of an audit committee. Type of Paper - Empirical.

Suggested Citation

  • Friska Firnanti, 2019. "Company Characteristics, Corporate Governance, Audit Quality Impact on Earnings Management," GATR Journals afr173, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr173
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    References listed on IDEAS

    as
    1. Steven Balsam & Eli Bartov & Carol Marquardt, 2002. "Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10–Q Filings," Journal of Accounting Research, Wiley Blackwell, vol. 40(4), pages 987-1012, September.
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    Cited by:

    1. Kutha, Ngakan Made & Susan, Marcellia & Institute of Research, Asian, 2021. "Institutional Ownership, External Auditor Reputation, Financial Leverage, and Earnings Management," OSF Preprints a6nye, Center for Open Science.
    2. Mahdi Salehi & Mohammed Ibrahim Jebur & Saleh Orfizadeh & Ali Mohammed Abbas Aljahnabi, 2022. "The Relationship between Audit Adjustments and Audit Quality in Iraq," JRFM, MDPI, vol. 15(8), pages 1-17, July.
    3. Rizky Eriandani & Kashan Pirzada & Melly Karina Kurniawan, 2020. "The role of auditor characteristics: earnings management and audit committee effectiveness," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 3242-3252, June.

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    More about this item

    Keywords

    Company Characteristics; Corporate Governance; Audit Quality; Earnings Management; Agency Theory.;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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