THE EFFECT OF BONUS MOTIVATION, FREE CASH FLOW, AND OTHER FACTORS ON EARNINGS MANAGEMENT
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Date
2024-02-05
Authors
Natasha, Agnes
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Sekolah Tinggi Ilmu Ekonomi Trisakti
Abstract
This research aims to obtain empirical evidence regarding the factors on earnings management for cyclicals and non-cyclicals companies listed in Indonesia Stock Exchange. The independent variables used in this research are bonus motivation, free cash flow, leverage, company size, sales growth, audit committee, managerial ownership, and institutional ownership on earnings management.
The population of this research are cyclicals and non-cyclicals companies listed on the Indonesia Stock Exchange (IDX) with a research period of 2020-2022. The sample used in this study amounted to 66 companies with 198 data obtained from data collection techniques in the form of purposive sampling. The hypothesis testing method used in this study is the multiple regression method.
The results of this study found that bonus motivation has positive effect on earnings management, meanwhile free cash flow has negative effect on earnings management. On the other hand, variables of leverage, company size, sales growth, audit committee, managerial ownership and institutional ownership have no effect on earnings management. A company who has high level of profitability will drive investors to make investments in the company and allow managers benefit personally. Therefore, they are motivated to do earnings management. On the contrary, higher institutional ownership would result in fewer accrual activities related to discretionary accounting, and higher free cash flow indicates that a business has sufficient funds to cover its operating and financial activities.
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