The Impact of Financial Performance Analysis On Earnings Management In Manufacture Companies
Abstract
This study aims to examine the effect of financial performance using : the ratio of leverage, the ratio of profitability, and the ratio of firm size on earnings management. Discretionary Accrual is used as the proxy of Earnings Management. The data used in this study are secondary data, which are manufacture companies are listed on the Indonesia Stock Exchange (IDX). The samplesusedin this studyare 10 manufacture companies which are listed in Indonesia Stock Exchange in the years of 2016 until 2020 in which selected by using the purposive sampling technique. The measurement of Earnings Management in this research has been carried by using modified Jones Model Discretionary Accrual. The analytical method of this study uses multiple linear regression.The result of this research describes that the leverage variable have any significant influence to the earnings management, since the size of the debt affects earnings management actions. The amount of debt will increase the risk of failure for the company, so management uses earnings management to reduce company failure. The profitability variable does not have any influence to the earnings management. Therefore, when the profitability of the company decrease, the practice of earnings management is tend to occur. And, the firm size variable has not influence to the earnings management. This problem occurs because large companies tend to do less earnings management activity than small companies.
Keywords: Leverage, Profitability, Firm Size, And Earnings Management
References
Agustia, D. 2013. The Influence of Good Corporate Governance, Free Cash Flow, and Leverage Factors on Earnings Management. Journal of Accounting and Finance 15(1):27-42.
Brigham, E. and J.F. Houston. 2006. Financial Management. Edition 8. Erlangga. Jakarta.
Eddy., Lili Syafitri., and Trisnadi Wijaya. 2014. Analysis of Structure Effect Ownership, Good Corporate Governance and Company Size Against Earnings Management of IDX Listed Manufacturing Companies
Fatmariani. 2013. Pengaruh Struktur Kepemilikan, Debt Covenant dan Growth Opportunities Terhadap Konservatisme Akuntansi Pada Perusahaan Manufaktur yang Terdaftar di BEI.
Ghozali, Imam. 2005. Application of Multivariate Analysis with SPSS Program. Semarang: Diponegoro University Publishing Agency.
Gunawan, I. K., Ari Surya, D. N., and Ayu Purnamawati, I, G. 2015. Effects Company Size, Profitability, and Leverage on Earning Management in Manufacturing Companies on the IDX. e-Jurnal.Vol. 03, No.01.
Hadri, K. 2006. Effects of Information Asymmetry on Dividend Policy. JAAI 10 (1): 1-12.
Hakim, L., Sunardi, N. (2017). Determinant of leverage and it's implication on company value of real estate and property sector listing in IDX period of 2011-2015. Man in India, 97(24), pp. 131-148.
Harahap, S. 2004. Analysis of Financial Statements. Raja Grafindo Persada. Jakarta.
Harmono. 2014. Financial Management. Third Edition. PT Bumi Aksara. Jakarta.
Harras, H., Sugiarti, E., & Wahyudi, W. (2020). Kajian Manajemen Sumber Daya Manusia Untuk Mahasiswa.
Husain, T., & Sunardi, N. (2020). Firm's Value Prediction Based on Profitability Ratios and Dividend Policy. Finance & Economics Review, 2(2), 13-26.
Indra, Randy. 2016. Effect of Bonus Compensation, Debt Covenant, Firm sizeon Earnings Management.Universitas Pendidikan Bandung.
Kadim, A., Sunardi, N & Husain, T. (2020). The modeling firm's value based on financial ratios, intellectual capital and dividend policy.Accounting, 6(5), 859-870.
Kusumawardani, N. F., and R. Rosiyana Dewi. 2016. Bonus Motivation, Taxes and Debt In Action Earnings Management. Media Research Accounting, Auditing & Information Vol.16, No.1 April 2016. Trisakti University.
Nardi Sunardi Et Al (2020). Determinants of Debt Policy and Company’s Performance, International Journal of Economics and Business Administration Volume VIII Issue 4, 204-213
Pujiati, E. J., & Arfan, M. (2013). Ownership Structure and Bonus Compensation and Their Effect on Earnings Management in Manufacturing Companies Listed on the Indonesia Stock Exchange 2006-2010. Journal of Accounting Studies and Research, 122-139
Riyanto. B. 2002. Fundamentals of Corporate Spending. Fourth Edition. BPFE. Yogyakarta.
Scott, W.R. 2003. Financial Accounting Theory. Third Edition. Toronto: Prentice hall.
Sulistyanto, H.S. and H. Wibisono. 2008. Earnings Management Theory and Empirical Model. PT Gramedia Widia Sarana Indonesia. Jakarta.
Syamsuddin, L. 2007. Corporate Financial Management. PT Raja Grafindo Persada. Jakarta.
Widyaningdyah, A.U. 2001. Analysis of Factors Influencing Earnings Management in Go Public Companies in Indonesia. Journal of Accounting & Finance 3 (2): 89-101.
Widyastuti, T. 2009. The Effect of Ownership Structure and Financial Performance on Earnings Management. Maksi Journal 9 (1): 30 – 41.
Yendrawati, R and W. A. S. Nugroho. 2012. Ownership Structure, Company Size, and Good Corporate Governance Practices on Earnings Management. Journal of Finance and Banking 16 (2): 188-195.
Downloads
Published
Issue
Section
License
Open Access
HUMANIS (Humanities, Management and Science Proceedings) is a national peer reviewed and open access journal that publishes significant and important research from all area of agroindustry.
This journal provides immediate open access to its content that making research publish in this journal freely available to the public that supports a greater exchange of knowledge.
Copyright
Submission of a manuscript implies that the submitted work has not been published before (except as part of a thesis or report, or abstract); that it is not under consideration for publication elsewhere; that its publication has been approved by all co-authors. If and when the manuscript is accepted for publication, the author(s) still hold the copyright and retain publishing rights without restrictions. Authors or others are allowed to multiply article as long as not for commercial purposes. For the new invention, authors are suggested to manage its patent before published. The license type is CC-BY-SA 4.0.
Disclaimer
No responsibility is assumed by publisher and co-publishers, nor by the editors for any injury and/or damage to persons or property as a result of any actual or alleged libelous statements, infringement of intellectual property or privacy rights, or products liability, whether resulting from negligence or otherwise, or from any use or operation of any ideas, instructions, procedures, products or methods contained in the material therein.