Open AccessCorporate Governance, Political Connections, and Earnings Management
Author(s) -
Ni Nyoman Iin Purnama Sari,
Ni Wayan Rustiarini,
Ni Putu Shinta Dewi
Publication year - 2022
Publication title -
afebi accounting review
Language(s) - English
Resource type - Journals
eISSN - 2548-5253
pISSN - 2548-5245
DOI - 10.47312/aar.v6i2.469
Subject(s) - accounting , corporate governance , earnings management , stock exchange , audit committee , business , audit , executive compensation , variables , politics , earnings , compensation (psychology) , finance , political science , law , psychology , machine learning , computer science , psychoanalysis
This study aims to examine the effect of corporate governance and political connection on earnings management. The corporate governance variable was reviewed using four proxies: bonus compensation, institutional ownership, independent commissioners, and financial expertise of audit committees. The study was conducted on 183 manufacturing companies on the Indonesian Stock Exchange for three research periods, namely 2017-2019. This study uses multiple linear regression to test the research hypotheses. The results prove that bonus compensation improves earnings management, while institutional ownership is proven to reduce earnings management. However, the other three variables, namely independent board of commissioners, financial expertise of audit committee, and political connections, do not affect earnings management practices.