Open AccessCorporate governance mechanisms and earnings quality: Is firm size a moderation variable?
Author(s) -
Badingatus Solikhah,
Agus Wahyudin,
Mamdouh Abdulaziz Saleh AlFaryan,
Nadia Novita Iranda,
Ain Hajawiyah,
Chia-Ming Sun
Publication year - 2022
Publication title -
journal of governance and regulation
Language(s) - English
Resource type - Journals
eISSN - 2306-6784
pISSN - 2220-9352
DOI - 10.22495/jgrv11i1siart1
Subject(s) - business , moderation , earnings quality , stock exchange , corporate governance , accounting , audit committee , earnings , quality (philosophy) , variables , earnings management , government (linguistics) , audit , finance , accrual , psychology , social psychology , philosophy , linguistics , epistemology , machine learning , computer science
The main objective of this research is to analyze the influence of independent commissioner, audit committee, managerial ownership, and institutional ownership on earnings quality. This study also observes the role of a firm’s size as a moderating variable. Using specific considerations, the number of the sample is reduced to 20 out of 144 companies from manufacturing companies listed in the Indonesian Stock Exchange during 2013–2016. The data analysis in this research used moderating regression. The results show that managerial ownership affects positively toward quality of the earnings. The firm’s size has proven to be able to strengthen the influence of managerial ownership and institutional ownership on earnings quality. Overall, this study reveals that the implementation of good corporate governance has been obliged by the government, but the supervisory function has not been executed optimally so it is not fully able to affect earnings quality. The results of this study contribute to both investors and potential investors in investment decisions. This paper suggests considering managerial and institutional ownership and company size since the variable is proven to be able to improve earnings quality.