DOI: https://doi.org/10.14710/dijb.7.1.2024.44-57

The effect of asymmetric information and financial distress ratio on earnings management with corporate governance as moderating variables

Department of Islamic Accounting, UIN Sunan Kalijaga Yogyakarta, Indonesia

Open Access Copyright 2024 Diponegoro International Journal of Business under http://creativecommons.org/licenses/by-sa/4.0.

Citation Format:
Abstract
This study aims to examine the effect of asymmetric information and financial distress ratio on earnings management with corporate governance as a moderating variable. Previous studies examining this topic still have inconsistent results. Seeing this, the researchers tried to re-examine using a sample of retail companies/trading sector, services and investment in the retail trade sub-sector listed on the Indonesia Stock Exchange (IDX) in 2015-2020. The sample of this research was taken through purposive sampling, totaling 20 companies. Data analysis methods are descriptive statistics, regression analysisi, and Moderated Regression Analysis (MRA) using Econometric Views (EViews) 10 for windows. The results showed that asymmetric information and liquidity had a positive effect on earnings management, while liquidity and leverage had a negative effect on earnings management. Independent commissioners can moderate the effect of asymmetric information and liquidity on earnings management but cannot moderate the effect of profitability and leverage on earnings management. The audit committee can moderate the effect of financial leverage (profitability, liquidity and leverage) on earnings management, but cannot moderate the effect of asymmetric information on earnings management.
Fulltext View|Download
Keywords: Asymmetric Information, Profitability, Liquidity, Leverage, Independent Board of Commissioners, Audit Committee, Earnings Management

Article Metrics:

Article Info
Section: Articles
Language : EN
Recent articles
Relationship of companies’ characteristics to foreign ownership: Studies on emerging market stock exchange in seven countries from ASEAN and Middle East Effect of capital structure, company size, profitability and liquidity on company value: evidence from Indonesia manufacturing companies The effect of internal control, integrated report and external assurance on SOE’s market value: the moderating role of board representation More recent articles
  1. Agatha Rusci, Vania Santosa, Setyarini, & Elisa Fitriana, V. (2021). Financial Distress and Earnings Management in Indonesia: the Role of Independent Commissioners. JIAFE (Jurnal Ilmiah Akuntansi Fakultas Ekonomi), 07(01), 89–104. https://doi.org/10.34204/jiafe.v7i1.3153
  2. Amake, C. C., & Akogo, O. U. (2021). Corporate Social Responsibility and Accrual-Based Earnings Management: Evidence from Nigeria. Mediterranean Journal of Social Sciences, 12(5), 15. https://doi.org/10.36941/mjss-2021-0040
  3. Anggreningsih, K. Y., & Wirasedana, I. W. P. (2017). Corporate Governance Sebagai Pemoderasi Pengaruh Asimetri Informasi Terhadap Praktik Manajemen Laba. E-Jurnal Akuntansi Universitas Udayana, 19(3), 2262–2292
  4. Arens, dkk. (2014). Auditing & Jasa Assurance (14th ed.). Erlangga
  5. Bhattacharya. (1979). Imperfect Information, Dividend Policy, and the “Bird in the Hand Fallacy.” Bell Journal of Economics, 10, 259–270
  6. Bravo-Urquiza, F., & Moreno-Ureba, E. (2021). Does compliance with corporate governance codes help to mitigate financial distress? Research in International Business and Finance, 55(May 2019), 101344. https://doi.org/10.1016/j.ribaf.2020.101344
  7. Brédart, X. (2014). Financial Distress and Corporate Governance: The Impact of Board Configuration. International Business Research, 7(3)
  8. Cadbury, A. (1992). Report of the committee on the financial aspects of corporate governance. Gee., 1, 90
  9. Chen, X., Li, W., Chen, Z., & Huang, J. (2021). Environmental regulation and real earnings management — Evidence from the SO2 emissions trading system in China. Finance Research Letters, June, 102418. https://doi.org/10.1016/j.frl.2021.102418
  10. Din, M. M., Awam, A. M., Ibrahim, F. M., & Hassan, H. (2021). Voluntary disclosure and complexity of reporting in Egypt: the roles of profitability and earnings management. Applied Accounting Research, 23(2), 480–508
  11. Eastman, E., Eckles, D. L., & Halek, M. (2021). Asymmetry in Earnings Management Surrounding Targeted Ratings. SSRN Electronic Journal, 21(3), 1–60. https://doi.org/10.2139/ssrn.3846968
  12. FCGI (Forum for Corporate Governance in Indonesia). (2001). Peranan Dewan Komisaris dan Komite Audit dalam Pelaksanaan Corporate Governance (Tata Kelola Perusahaan). In Tata Kelola Perusahaan (Corporate Governance) (Vol. 2)
  13. Gandhi, K. (2021). Financial Distress, Earnings Benchmark and Earnings Management Practices. Sage Pub Journal, 1(22), 1–22. https://doi.org/10.1177/09722629211010978
  14. Garel, A., Martin-Flores, J. M., Petit-Romec, A., & Scott, A. (2021). Institutional investor distraction and earnings management. Journal of Corporate Finance, 66(November 2020), 101801. https://doi.org/10.1016/j.jcorpfin.2020.101801
  15. Gerged, A. M., Albitar, K., & Al-Haddad, L. (2021). Corporate environmental disclosure and earnings management—The moderating role of corporate governance structures. International Journal of Finance and Economics, July 2020, 1–22. https://doi.org/10.1002/ijfe.2564
  16. Ghorbani, A., & Salehi, M. (2020). Earnings management and the informational and disciplining role of debt : evidence from Iran. Journal of Asia Business Studies, 15(1), 72–87. https://doi.org/10.1108/JABS-11-2019-0336
  17. Ghozali, I. (2013). Aplikasi Analisis Multivariate dengan Program IBM SPSS 21 Update PLS Regresi. Badan Penerbit Universitas Diponegoro
  18. Hanafi, M. M., & Halim, A. (2004). Analisis Laporan Keuangan (7th ed.). UPP AMP YKPN
  19. Handriani, E., Ghozali, I., & Hersugodo, H. (2021). Corporate governance on financial distress: Evidence from Indonesia. Management Science Letters, 11, 1833–1844. https://doi.org/10.5267/j.msl.2021.1.020
  20. Harris, L. L., Jackson, S. B., Owens, J., & Seybert, N. (2021). Recruiting Dark Personalities for Earnings Management. Journal of Business Ethics, 18(2), 1–26. https://doi.org/10.1007/s10551-021-04761-z
  21. Healy, P. M., & Wahlen. (1999). A Review Of The Earnings Management Literature And Its Implications For Standard Setting. Accounting Horizons, 13, 365–383
  22. Jensen, M., C., & W. Meckling. (1976). Theory of the firm: Managerial behavior, agency cost and ownership structure. Journal of Finance Economic, 3
  23. Kasmir. (2019). Analisis Laporan Keuangan. Rajawali Pers
  24. Karin, Evelyn, & Yulius. (2020). The Effect of Financial Factors on Earnings Management with Corporate Governance as Moderating Variable. Jurnal Wira Ekonomi Mikroskil, 6(April), 55–72
  25. Kieso, Weygandt, & Kimmel. (2017). Financial Accountig : IFRS Edition (9th ed.). John Wiley
  26. Le, T. P. V., & Phan, T. B. N. (2017). Capital structure and firm performance: Empirical evidence from a small transition country. Research in International Business and Finance, 42, 710–726. https://doi.org/10.1016/j.ribaf.2017.07.012
  27. Mayndarto, E. C., & Murwaningsari, E. (2021). The Effect of Good Corporate Governance on Earning Management With the Bonus Plan As a Moderating Variables. International Journal of Social and Management Studies (Ijosmas), 02(03), 35–46
  28. Monika, D. T., Mardhatillah, K., & Noviyanti. (2021). Pengaruh Good Corporate Governance dan Asimetri Informasi Terhadap Manajemen Laba. Humanities, Management and Science Proceeding, 1(2), 333–341
  29. Paul, A., & Rakshit, D. (2020). Earnings Management and Financial Distress : An Analysis of Indian Textile Companies. Journal of Economics and Public Policy, V(3), 40–53
  30. Ridwan, R., & Suryani, E. (2021). Pengaruh Kebijakan Dividen, Kompensasi Eksekutif dan Asimetri Informasi terhadap Manajemen Laba. Jurnal Ilmiah MEA (Manajemen, Ekonomi, & Akuntansi), 5(3), 836–847
  31. Scott, W. R. (2015). Agency Theory : Earnings Management. In Financial Accounting Theory. Pearson Canada Inc
  32. Septiadi S, P. P., & Mimba H, N. P. S. (2015). Pengaruh Asimetri Informasi pada Manajemen Laba dengan Corporate governance sebagai Variabel Moderasi. E-Jurnal Akuntansi Universitas Udayana, 2, 452–464
  33. Sugiono, L. P., & Christiawan, Y. J. (2013). Analisa Faktor yang Mempengaruhi Likuiditas Pada Industri Ritel yang Terdaftar Pada Bursa Efek Indonesia Tahun 2007-2012. Business Accounting Review, 1(2), 298–305
  34. Sulistyanto, H. S. (2008). Manajemen Laba (2nd ed.). PT Grasindo
  35. Syahyidati, S., & Venusita, L. (2019). Moderasi Corporate Governance Terhadap Hubungan Asimetri Informasi Dengan Manajemen Laba. Business Accounting Review, 53(9), 1689–1699
  36. Thinh, T. Q., & Thu, T. N. A. (2020). Influence of financial indicators on earnings management behavior : evidence from Vietnamese commercial banks. Journal of Banks and Bank Systems, 15(2), 167–176. https://doi.org/10.21511/bbs.15(2).2020.15
  37. Tiong, P., & Irwan, A. (2021). Analisis Determinan Manajemen Laba dengan Good Corporate Governance sebagai variable Moderasi Governance as Moderating Variable. Jurnal Manajemen Bisnis Dan Kewirausahaan, 1(2), 128–147
  38. Utomo, L. P. (2020). Good Corporate Governance Moderation of Influences Between Information Asymmetry Against Earnings Management. Jurnal Ilmiah Akuntansi, 4(2), 183–190
  39. Vulandari, R. T., Rimawati, E., & Lisyati. (2021). Statistika dengan Aplikasi EViews (1st ed.). Gava Media
  40. Wening, A.A.D.K., And Damayanthi, I. G. A. E. (2021). Factors Affecting the Earnings Management of State-Owned Enterprises in 2010-2019. American Journal of Humanities and Social Sciences Research (AJHSSR), 5(4), 487–494
  41. Yuliani, R., & Rahmatiasari, A. (2021). Pengaruh Corporate Governance terhadap Financial Distress dengan Kinerja Keuangan sebagai Variabel Moderating (Perusahaan Manufaktur di BEI). Reviu Akuntansi Dan Bisnis Indonesia, 5(1), 38–54. https://doi.org/10.18196/rabin.v5i1.11333

Last update:

No citation recorded.

Last update:

No citation recorded.