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Type of earnings management and the effect of ownership structure, firm size, and corporate-governance practices: Evidence from Indonesia

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  • Siregar, Sylvia Veronica
  • Utama, Sidharta

Abstract

The purpose of this study is to investigate whether companies listed on the Jakarta Stock Exchange (JSE) conduct efficient or opportunistic earnings management and to examine the effect of ownership structure, firm size, and corporate-governance practices on it. Using multiple regressions, we find evidence that the type of earnings management selected by JSE listed firms tends toward efficient earnings management. This evidence is inconsistent with the common view that earnings management in Indonesia is opportunistic. Family ownership has a significant influence on the type of earnings management selected. Firms with a high proportion of family ownership and non-business groups are more inclined to choose efficient earnings management than other types of firms. We find inconsistent evidence with regard to the impact of institutional ownership, firm size, and corporate-governance practices on type of earnings management.

Suggested Citation

  • Siregar, Sylvia Veronica & Utama, Sidharta, 2008. "Type of earnings management and the effect of ownership structure, firm size, and corporate-governance practices: Evidence from Indonesia," The International Journal of Accounting, Elsevier, vol. 43(1), pages 1-27, March.
  • Handle: RePEc:eee:accoun:v:43:y:2008:i:1:p:1-27
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    References listed on IDEAS

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    2. Zhijun Lin & Ming Liu & Carlos Noronha, 2016. "The Impact of Corporate Governance on Informative Earnings Management in the Chinese Market," Abacus, Accounting Foundation, University of Sydney, vol. 52(3), pages 568-609, September.
    3. Yves Mard & Sylvain Marsat, 2011. "Gestion des résultats comptables et structure de l'actionnariat : le cas français," Post-Print hal-00650550, HAL.
    4. Greco, Giulio, 2012. "Ownership structures, corporate governance and earnings management in the European Oil Industry," MPRA Paper 37198, University Library of Munich, Germany.
    5. Hui-Wen Tang & Chong-Chuo Chang, 2015. "Does corporate governance affect the relationship between earnings management and firm performance? An endogenous switching regression model," Review of Quantitative Finance and Accounting, Springer, vol. 45(1), pages 33-58, July.
    6. Fatima Abdul Hamid & Chaabane Oussama Houssem Eddine & Abdullah Mohamed Ayedh & Abdelghani Echchabi, 2014. "Firms' Financial And Corporate Governance Characteristics Association With Earning Management Practices: A Meta-Analysis Approach," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 12(2), pages 49-72.
    7. Nuryaman, 2012. "The Influence Of Corporate Governance Practices On The Company’S Financial Performance," Journal of Global Business and Economics, Global Research Agency, vol. 5(1), pages 1-17, July.
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    15. Xingqiang Du & Wei Jian & Shaojuan Lai & Yingjie Du & Hongmei Pei, 2015. "Does Religion Mitigate Earnings Management? Evidence from China," Journal of Business Ethics, Springer, vol. 131(3), pages 699-749, October.

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