THE EFFECT OF OWNERSHIP STRUCTURES, FINANCIAL RATIOS, AND COMPANY CHARACTERISTICS ON EARNINGS MANAGEMENT
No Thumbnail Available
Date
2024-02-24
Authors
Martin, Vincent
Journal Title
Journal ISSN
Volume Title
Publisher
Sekolah Tinggi Ilmu Ekonomi Trisakti
Abstract
This research aims to obtain empirical evidence on whether the components of ownership structures, financial ratios, and company characteristics influence earnings management practices. This research has eight independent variables, namely institutional ownership, managerial ownership, profitability, leverage, liquidity, inventory turnover, firm size, and firm age.
The population of this research are consumer non-cyclicals and consumer cyclicals companies listed in Indonesia Stock Exchange (IDX) with a research period of 2020-2022. This research uses data collection techniques in the form of purposive sampling resulting in a sample of 43 companies with 129 data. The data is then analyzed using the multiple regression method.
The results of this research indicate that profitability, leverage, liquidity, and firm age influence earnings management. However, other independent variables such as institutional ownership, managerial ownership, inventory turnover, and firm size have no influence on earnings management. Management bonuses increase in direct proportion to a company's profitability, motivating them to manage earnings. If a company is threatened with insolvency, the immediate action management can take is earnings management. Liquid companies are highly sought after, and management will manage earnings to come across as financially stable. Long-standing firms have a reputation to uphold. They are less likely to practice earnings management