Analysis of the Effect of Earnings Persistence, Good Corporate Governance and Accrual Component to Earnings Quality on Banking in Indonesia in 2011 – 2015

This study aims to examine empirically the effect of earnings persistence, good corporate governance, and the accrual component of the quality of earnings in the banking sector in Indonesia. Data analysis was performed using quantitative descriptive method that aims to provide an overview of the nature of things that took place at the time the research was done. The study sample consisted of 25 banks listed on the Indonesia Stock Exchange (IDX) with data for a period of 5 years (2011-2015). The results showed that the accrual component of earnings persistence and significant effect on the quality of earnings. The resulting value is significantly smaller than 0.05. While GCG no significant effect on the quality of earnings in the banking sector in Indonesia, where significant value is greater than 0.05. This Study contributes to the existing Earnings Persistence, corporate governance, accrual component and earnings quality literature in emerging markets. In addition, this study offers some useful insights for regulators and policy makers by testing the effect of Banking Indonesia’s reforms on earnings quality Keyword : Earnings persistence, GCG, accrual component, earnings quality Introduction The earnings information in the financial statements is generally important, especially for those who use financial statements for the purposes of contracting and investment decision making. From the perspective of contract objectives, profit information can be used to make decisions related to Good Corporate Governance practices, can also be used as a basis for salary allocation within an enterprise (Sugiarto dan Siagian, 2010). Management that has a particular interest will tend to compile earnings reports in accordance with its purpose and not in the interest of the principal. Under these circumstances, a control mechanism is required that aligns the differences of interests between the two parties. Good Corporate Governance Mechanism has the ability in relation to produce a financial statement that contains information of profit (Boediono, 2010). 1 Corresponden Author : Mahasiswa Magister Akuntansi FEB Universitas Airlangga Kampus B Surabaya Telp. (031) 5033642, 5036584 Email : elok.faiqoh.himmah-2015@feb.unair.ac.id ARTICLE INFO