Research Article
Corporate Governance Mechanisms and Real Earnings Management: Evidence from Indonesia
@INPROCEEDINGS{10.4108/eai.1-10-2020.2304918, author={Maria Goreti Kentris Indarti and Faisal Faisal and Etna Nur Afri Yuyetta and Jacobus Widiatmoko}, title={Corporate Governance Mechanisms and Real Earnings Management: Evidence from Indonesia}, proceedings={Proceedings of the First International Conference of Economics, Business \& Entrepreneurship, ICEBE 2020, 1st October 2020, Tangerang, Indonesia}, publisher={EAI}, proceedings_a={ICEBE}, year={2021}, month={4}, keywords={corporate governance mechanism real earnings management indonesia stock exchange}, doi={10.4108/eai.1-10-2020.2304918} }- Maria Goreti Kentris Indarti
Faisal Faisal
Etna Nur Afri Yuyetta
Jacobus Widiatmoko
Year: 2021
Corporate Governance Mechanisms and Real Earnings Management: Evidence from Indonesia
ICEBE
EAI
DOI: 10.4108/eai.1-10-2020.2304918
Abstract
This paper discusses how the corporate governance mechanism determines the opportunistic behavior of management in the form of earnings management practices with real activities manipulation. This study provides benefits to the development of literature by examining the effect of corporate governance mechanisms on real earnings management practices in the manufacturing sector listed on the Indonesia Stock Exchange (IDX) 2016-2018. Using purposive sampling method, 224 data were obtained. Multiple regression analisis use to test hyphothesis, and the results showed that the existence of independent commissioner is able to reduce the level of real earnings management. Instead, the existence of audit committee cannot reduce the opportunistic behavior of management. This finding proved the need to strengthen the mechanism of corporate governance through the existence of independent commissioners. Regarding the ownership structure, this study was unable to prove the role of share ownership by institutions and management in reducing real earnings management practices.