Open AccessThe effect of financial distress on earning management practices using classification shifting: The moderating effect of good corporate governance
Author(s) -
Cokorda Istri Eka Pratiwi,
Herkulanus Bambang Suprasto,
Maria Mediatrix Ratna Sari,
Dodik Ariyanto
Publication year - 2022
Publication title -
accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.175
H-Index - 5
eISSN - 2369-7407
pISSN - 2369-7393
DOI - 10.5267/j.ac.2021.7.002
Subject(s) - earnings management , stock exchange , nonprobability sampling , corporate governance , business , accounting , population , audit committee , financial distress , audit , empirical evidence , distress , earnings , finance , financial system , ecology , philosophy , demography , epistemology , sociology , biology
The existence of good corporate governance is expected to minimize the occurrence of earnings management practices when the company is in financial distress condition. This research aims to provide empirical evidence on the influence of financial distress on earnings management practices as well as the existence of good corporate governance projected by the proportion of independent commissioners and the proportion of audit committees in weakening the influence of financial distress on earnings management practices. The population of this study is property, real estate, and building construction sector companies listed on the Indonesia Stock Exchange for the period 2015-2019. Sampling techniques used are purposive sampling techniques and obtained samples as many as 185 samples. The earnings management tool used in this study was classification shifting. The data analysis techniques in this study used Eviews 10. The results of the analysis provide evidence that financial distress affects earnings management practices, while the proportion of independent commissioners is unable to moderate, and the audit committee strengthens the influence of financial distress on earnings management practices.