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The modern economy transit from manufacturing to knowledge-based industries that are dependent on investments in R&D, advertising, and employee talents. These investments and much of the value that they generate cannot be capitalized as assets. As these intangible assets are off-balance-sheet, a firm’s book value might be low. When book value fails to present a firm’s true value, we stipulate that management has incentive to manage its earnings to convey information that is not reflected in the balance sheet. We find that firms with negative book value and in the New Economy use more discretionary accruals. [ABSTRACT FROM AUTHOR]

AbstractThis study ventures into the underexplored realm of tax planning in Indonesia, a domain where extensive research is still in its nascent stage but critically vital. Amidst the Indonesian government’s reliance on taxation for fostering inclusivity, this research delves into the impact of ownership structures and earnings management on tax avoidance practices. By collecting and analyzing data from 90 companies listed on the Indonesia Stock Exchange from 2017 to 2020, encompassing 344 firm-years, this study employs multiple linear regression to dissect the complexities involved. The findings reveal that insider ownership and earnings management negatively influence tax avoidance, whereas institutional and blockholder ownership exhibit a positive impact. These insights offer a fresh perspective on how incentives for tax evasion vary across different ownership structures and management levels, highlighting how opportunistic behavior in earnings management can indicate a propensity toward tax avoidance.

AbstractOne of the key components of corporate governance frameworks, the audit committee is a potent instrument for controlling and supervising earning management. It might significantly affect how decisions about internal firm-board monitoring are made. The purpose of this study was to investigate the impact of audit committee features on the earning management of insurance businesses in Ethiopia from 2015 to 2022. The impact of audit committee features on earning management was studied using the generalized moment (GMM) model. According to the study, the size of the audit committee (ACS) has a significant and positive impact on the insurance companies’ earnings management in Ethiopia. Additionally, the study discovered that the audit committee’s independence (ACI), expertise (ACE), meeting (ACM), and gender (ACG) all have a significant and positive impact on the earning management of insurance companies in Ethiopia. Thus, the study came to the conclusion that all audit committee characteristic measures have a significant impact on the discretionary accrual (DA)-measured earning management of insurance businesses in Ethiopia. Therefore, the internal governance mechanisms should be strengthened and improved by insurance company policymakers in Ethiopia.

This research aims to determine and analyze earnings management practices by companies by using the Jones Model to calculate discretionary accruals that proxy earnings management. The research was conducted at PROPER companies listed on the Indonesia stock exchange from 2017 to 2021. This research will be a descriptive study with a quantitative approach which is a differentiator from other research that tends to conduct associative research, so this research can explore the earnings management practices carried out more intensely. The research result reveal that all PROPER companies are indicated to practice earnings management and are dominated by companies that have made environmental management efforts required following the provisions. This research can be a consideration for stakeholders in making decisions.

Research aims: The COVID-19 pandemic disrupted multiple industries, including chemistry, pharmaceuticals, telecommunications, and healthcare. This study, thus, explores how these sectors managed their earnings concerning political factors during the pandemic. Since these sectors play a critical role in maintaining business stability during this period, the authors hypothesize that some companies within them may have manipulated their profits. Design/Methodology/Approach: This study used quantitative methods to analyze a sample of companies in the chemical, pharmaceutical, telecommunications, and healthcare sectors listed on the Indonesia Stock Exchange from 2018 to 2022. Out of 60 companies, 20 met the criteria. The authors then tested the political costs hypothesis using Kotari et al.'s (2005) calculation method and a discrimination test for discretionary accrual values. Research findings: The findings reveal that some companies practiced earnings management with varying degrees across sectors. Notably, not all companies employed revenue reduction as a manipulation tactic. Significant differences were observed between the pre-pandemic and pandemic periods. It is worth highlighting that not all COVID-19 beneficiaries resorted to earnings management to access government incentives or facilities. Theoretical contribution/Originality: The findings of this research offer empirical evidence from both a theoretical standpoint and an analysis of the financial status of the involved companies. Practical/Policy Implication: This study aims to investigate if companies manipulated earnings during the COVID-19 pandemic by intentionally reducing their profits when their sectors were thriving due to the pandemic. Research Limitation: This research is limited by its use of quarterly data, incomplete data for some companies, and a reliance on existing data rather than current information collection.

In this study, we examine how debt financing in general and bank borrowings in particular affect the earnings quality (EQ) at Indian firms. We conducted an empirical analysis, taking a sample of 626 Indian non-financial firms from 2003 to 2021. Our sample comes from the food and agro-based industry, which is divided into four relatively homogenous groups. On each of the groups, we apply an industry-wise cross-sectional version of the modified Jones model (Dechow et al., 1995) for estimating discretionary accruals (DACC), a measure of EQ. Testing the hypotheses using industry fixed effects for four sub-sectors, we found that bank financing is negatively associated with DACC (positively associated with EQ), whereas non-bank loans affect positively. We interpret this as a sign of discretion applied by opportunistic managers of borrowing firms to showcase a good financial position for reducing the cost of covenant violation. Further, the age, size and performance of the firms are positively related to EQ, while growth opportunity has a negative impact, as expected. The study is helpful for lenders and stakeholders to make policies and minimise their exposure to credit risk. [ABSTRACT FROM AUTHOR]

With sound governance in the use of leveraged funds and a high level of audit quality, compliance with auditing standards incentivizes managers to manage earnings. The purpose of this study is to empirically examine the effect of the audit quality and leverage strategy on earnings management in the emerging markets of Aneka Industries companies listed on the Indonesian stock exchange, using good corporate governance as a mediating variable. The population of this study is comprised of companies listed on the Indonesian stock exchange, with a sample size of 225 observations spanning multiple industries between 2016 and 2020. Secondary data sources with SEM-PLS analysis of the resulting data. The findings indicated that audit quality and leverage had a significant effect on effective corporate governance, while effective corporate governance had a significant effect on earnings management. Audit quality and leverage both have a significant impact on earnings management, and good corporate governance is an effective moderator of the effect of audit quality and leverage on earnings management. This research contributes to corporate governance on earnings management from a developing company's perspective. Additionally, this study conducts an empirical examination of the impact of Aneka Industries corporate governance structure. [ABSTRACT FROM AUTHOR]

Corporate governance mechanisms have continued to strengthen the operations and activities of corporate entities in Nigeria. Board characteristics and earnings management have attracted many scholars trying to establish relevant relationship that will assist policy makers and regulatory agencies in facilitating good corporate governance. This study examines the impact of board characteristics on earnings management of listed consumer goods firms in Nigeria. The Agency Theory was used to underpin the study. Board characteristics as the independent variable was proxied using board independence, board meetings, board gender diversity and board expertise while earnings management as the dependent variable was measured using the Modifies Jones Model. The panel data multiple regression was used on data extracted from annual reports of sixteen listed consumer goods firms from 2011 to 2020. The study found that, board gender diversity and board expertise negatively and significantly influence earnings management while board independence and board meetings have no significant influence on listed consumer goods firms in Nigeria. The study therefore recommends that, regulatory agencies and policy makers should encourage listed consumer goods firms in Nigeria to increase diversity in boards and expertise as this will minimize earnings management activities by management.

Research aims: This study aims to empirically prove the influence of profitability, solvency, liquidity, activity, dividend policy, and discretionary accruals on fixed-asset investment decisions. Design/Methodology/Approach: The researchers used consumer goods companies listed on the Indonesia Stock Exchange (IDX) from 2013 to 2019. Using the purposive sampling method, this study resulted in 163 bank-year observations. The data were then analyzed utilizing a fixed-effect model. Research findings: The results showed that profitability, liquidity, activity, and discretionary accruals positively affected fixed-asset investment. Meanwhile, the dividend policy negatively affected fixed-asset investment. This study strengthens the pecking order theory. In addition, the research sample used internal funds as a funding source for investment in fixed assets. Theoretical contribution/Originality: The variable added in the study distinguishing it from previous researchers is the discretionary accrual variable. Discretionary accruals have been proven to impact resource allocation, one of which is investment decisions. The additional discretionary accruals variable is expected to strengthen the influence of the consumer goods companies' fundamental factors on investment decisions in fixed assets. Practitioner/Policy implication: Investment in fixed assets in the consumer goods companies uses internal funds because these funds are low risk and support the company's sustainability. Research limitation/Implication: This study used dividend policy as one of the independent variables, and companies that did not distribute dividends could not be sampled.

This study aims to analyze the effect of credit rating, discretionary accrual, and financial distress on credit facilities, namely the rate spread, credit collateral, and maturity date extended by banks. This study uses static panel equations and panel data, consisting of 50 manufacturing companies in Indonesia from 2010 to 2017. The research methods used are the Pooled Least Square (PLS), Fixed Effect Model (FEM), Random Effect Model (REM), and logit panels. This study concludes that earnings management has a negative and insignificant impact on the rate spread and maturity date but positively and significantly affects the collateral variable. Financial distress has a positive and insignificant effect on the rate spread and maturity date but negatively impacts the collateral variable. The company’s investment rating has a negative and insignificant impact on the three dependent variables, namely, rate spread, collateral, and maturity date. Keywords: Credit Rating, Discretionary Accrual, Financial Distress, Credit Facilities JEL: C23, G21, G24

We provide evidence that the differences in economic growth and stability of firms during different stages of their life cycle encourage managers to manage the reported earnings differently to achieve their goals. Our findings support the expectation that managers adjust the reported earnings upward using positive discretionary accruals during the introductory and decline stages of firm life cycle. The upward adjustment of reported earnings during the introductory stage enables them to achieve the objective of sending positive signals on firm performance when the firm is in a formative stage, and also provides a better base for prediction of future earnings. The upward adjustment of reported earnings during the decline stage are expected to enhance firm's life, which would enable managers to take remedial actions to improve firm performance, especially when the firm is in a distress situation. On the other hand, our findings show that managers may consider using negative discretionary accruals during the growth and maturity stages so that they can save some earnings for use during later years when firm performance compared to market expectations is weak. The managers are, however, not likely to adjust the reported earnings downward when the reported earnings fall short of market expectations. Additionally, we find that large institutional shareholdings perform effective monitoring and discourage managers to use discretionary accruals because their use may result in lower reliability of reported earnings. [ABSTRACT FROM AUTHOR]

Accounting information generated by financial statements is needed by various parties for the decision-making process. An independent third party is needed, namely the auditor to provide an assessment of the quality of the accounting information. Quality audit results can ensure that there are no material misstatements in the financial statements, so that the information in the audited financial statements can be used as a tool for decision making. This study aims to empirically examine the effect of audit tenure, audit fees, and company size on audit quality. The population of this study is manufacturing companies listed on the Indonesia Stock Exchange for the period 2017-2019. Sampling used the purposive sampling method, and a sample of 58 manufacturing companies was obtained. The data analysis method uses the method of multiple linear regression. Audit quality is measured using the Kaznik model's discretionary accruals, tenure audits use the length of the audit engagement, audit fees use Ln fees KAP, and company sizes use Ln total assets. The results showed that the audit fee had a positive effect on the quality of the audit, while the audit tenure and size of the company did not affect the quality of the audit. Simultaneously, tenure audits, audit fees, and company size affect the quality of audits. [ABSTRACT FROM AUTHOR]

Financial managers intentionally use the legal manipulation of earnings to the business development. Earnings management is a widespread business finance phenomenon. The approaches and the ways of this practice are marked by many parallels. The main target of the article is to show the clusters with the close approach of the enterprises to the earnings manipulation and demonstrate hidden relations of the earnings management between sectors in the Visegrad Group. The study estimates the earnings management by the Modified Jones model. 52,545 discretionary accruals are computed for Slovak, Czech, Hungarian, and Polish enterprises for 5-year horizon in 19 sectors classified by the NACE. The clusters of close practices of the earnings management are identified based on principal component analysis and cluster analysis in every country of Visegrad Four. Moreover, the results detect the dependences between sectors in the region and the specificity of the sectors. [ABSTRACT FROM AUTHOR]

In 2008, the Indonesian Directorate General of Tax Law changes the Income Tax Law. They have been issued the Law Division 36 of 2008 on Income Tax. Corporate income tax rates changes from progressive rates to single rate, which 28% were effected in 2009 and 25% were effected in 2010. The purpose of this research is to examine and analyze whether changes in corporate income tax rates in Indonesia responded to earnings management by comparing the level of discretionary accruals in the period before and after the enactment of Law Division 36 of 2008. Another purpose of this research is to test whether tax incentives (tax planning and net de-ferred tax liabilities) and non-tax incentives (earnings pressure, level of debt, firm size, and managerial ownership) affect earnings management. This research is quantitative research with the object of research is manufacturing firms listed on the Indonesia Stock Exchange from 2006 to 2011. Data obtained from the publication of the audited financial report or annual report and ICMD. Sampling in this research is purposive sampling. Data analysis techniques used in this research are different test and multiple linear regression analysis. The results showed that there is no management responded by conducting earnings management when corporate income tax rates in Indonesia has changed. Regression results indicate that tax incentives (tax planning and net deferred tax liabilities) and non-tax incentives (earnings pressure, the level of debt and managerial ownership) have a significant effect on earnings management. For firm size had no significant effect on earnings management.

This study highlights the impact of adopting the International Financial Reporting Standards (IFRS) on audit fees for all the companies that trade European shares on the Bucharest Stock Exchange (ATS INT – Alternative international trading systems). The total sample that is the basis of this study is made up of 15 companies that trade European shares through the International Alternative Trading Systems. The data was collected manually, from the Thomson Reuters BDI, for the period 2000-2018, so we could easily observe the real size of the audit fees after the adoption of IFRS became mandatory, which is the share of companies audited by Big 4 and their audit opinion. In this paper a CrossTabulation was used in SPSS, to test our hypothesis, according to which the adoption of IFRS led to the growth of the audit fees, which registered considerable increases after 2012. At the same time, it was observed that most of the companies are audited by Big 4 and an unqualified opinion is given above all by them.

Financial managers intentionally use the legal manipulation of earnings to the business development. Earnings management is a widespread business finance phenomenon. The approaches and the ways of this practice are marked by many parallels. The main target of the article is to show the clusters with the close approach of the enterprises to the earnings manipulation and demonstrate hidden relations of the earnings management between sectors in the Visegrad Group. The study estimates the earnings management by the Modified Jones model. 52,545 discretionary accruals are computed for Slovak, Czech, Hungarian, and Polish enterprises for 5-year horizon in 19 sectors classified by the NACE. The clusters of close practices of the earnings management are identified based on principal component analysis and cluster analysis in every country of Visegrad Four. Moreover, the results detect the dependences between sectors in the region and the specificity of the sectors.

Purpose: This research was conducted to test whether ownership structure has an influence on earnings management using the control variables of leverage, company size, profitability, and company growth. Moreover, this research aims to find out what type of ownership has more influence on earnings management in Indonesia therefore the authors focus on all types of company ownership as independent variables. Design/methodology/approach: The purposive sampling method is used for the selection of the research samples. This research uses non-financial companies listed on the Indonesia Stock Exchange from 2016 to 2019 as research objects. Earnings management is measured using discretionary accruals which is a Modified Jones Model. The ownership structure is calculated from the percentage of each share ownership in the company. Findings: The results of this research indicate that there is no significant effect of ownership structure on earnings management in Indonesia. Only leverage, company size, and company growth have a significant positive effect on earnings management. Practical implications: This research is useful for improving decision making for corporate governance, as well as providing information to academics about the influence of the supervisory role of ownership structure on earnings management. Originality/value: This article expands on previous research by including the type of ownership structure as an independent variable and examines its effect on earnings management in developing countries. [ABSTRACT FROM AUTHOR]

This study is aimed at providing empirical evidence on the association between audit tenure and audit quality to support the argument of the enactment of regulation on audit rotation in Indonesia. Using the theory of comfort perspective, this study focused on the person-to-person relationship; that is the relationship between partners of the public auditing firm and the client firm’s CEO; as well as on the relations at the firm level. Panel regression is employed to study the association of audit tenure and audit quality. The results revealed the fact that the audit partner and CEO tenure measured by the years of the audit contract has a negative association with audit quality proxied by discretionary accruals. Furthermore, the tenure of the public auditing firm and the client’s firm had a moderately significant positive impact on companies’ audit quality. The results imply that the regulation of audit partner rotation is needed to renew the sense of comfort in terms of maintaining high audit quality.

Copyright of Journal of Accounting Review is the property of Journal of Accounting Review and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Manajemen Laba (earning management) merupakan tindakan manajemen berupa campur tangan dalam proses penyusunan laporan keuangan dengan maksud untuk meningkatkan kesejahteraan baik secara individu maupun untuk perusahaan. Penelitian ini mengelompokkan sampel ke dalam dua kelompok, yaitu perusahaan perbankan yang mengalami kerugian dan perusahaan perbankan yang memperoleh keuntungan. Penelitian ini dimaksudkan untuk mengetahui indikasi terdapatnya praktek manajemen laba dan perbedaannya antara kedua kelompok bank tersebut. Berdasarkan hasil pengujian dengan menggunakan beberapa metode diperoleh hasil bahwa memang terdapat indikasi manajemen laba pada kedua kelompok bank yang diteliti. Diantara dua kelompok tersebut terdapat perbedaan discretionary accrual yang signifikan antara bank yang memperoleh laba dan bank yang mengalami kerugian, dimana bank yang memperoleh laba discretionary accrualnya lebih tinggi daripada pada bank yang mengalami kerugian.

Copyright of Revista de Administração da UEG is the property of Universidade Estadual de Goias and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The purpose of this study is (1) to analyze the effect of accrual earnings management on the company performance measured with Return On Assets (ROA), (2) to analyze the effect of accrual earnings management on the company performance measured with Tobins Q. This study uses the data of manufacturing companies listed in Indonesia Stock Exchange. The sampling technique used is purposive sampling method. The researcher uses Khotari Model to calculate discretionary accruals as the proxy of earn-ing management, while the company performance in this study is proxied by the indi-cators of Return on Assets (ROA) and Tobins Q. The analysis technique used is descriptive analysis and simple linear regression. The results of this study prove that accrual earnings management affects ROA and Tobins Q. This study also proves that there is a decline in market value when the earnings management is performed.