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Does Corporate Governance and other Factors Influence Earnings Management? A Study on Indonesia’s Banking Sector

Author

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  • Sigit Handoyo
  • Inneke Tri Kusumaningrum

Abstract

The issue of misreporting financial data and earnings management has become more prominent in recent years. Several studies have been conducted determining the influences of the mechanisms of corporate governance and earnings management in various countries. In this study, it was proven that the existence of a good corporate governance (GCG) mechanism did not suppress earnings management practices in the banking sector industry in Indonesia. However, another factor, dividend policy, can prove effective in suppressing earnings management. The measurement of earnings management in this study was carried out using the Modified Jones model with a population of 43 conventional banks from which research data were taken using a purposive sampling technique sourced from the Indonesia Stock Exchange (IDX). The analysis was carried out using multiple linear regression. The implication of this research is that the implementation of good corporate governance by an entity must be considered given that earnings management practices in Indonesia are still relatively high.

Suggested Citation

  • Sigit Handoyo & Inneke Tri Kusumaningrum, 2022. "Does Corporate Governance and other Factors Influence Earnings Management? A Study on Indonesia’s Banking Sector," Humanities and Social Sciences Letters, Conscientia Beam, vol. 10(1), pages 11-26.
    • Handle: RePEc:pkp:hassle:v:10:y:2022:i:1:p:11-26:id:2227
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    Cited by:

    1. Olfa Ben Salah & Anis Jarboui, 2023. "Impact of Dividend Policy on Earnings Management and The Moderating Effect of The Board of Directors and The Audit Committees: The French Case," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 22(3), pages 408-427, September.

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