The Effect of Leverage and Financial Distress on Earnings Management with Good Corporate Governance as the Moderating Variable
Journal Title: Academic Journal of Economic Studies - Year 2017, Vol 3, Issue 4
Abstract
Every investor wants his company’s financial statement to be in accordance with the condition of the company. In practice, it often occurs that a company does profit management to attract investors’ interest. The factors which can increase the practice of profit management are leverage and financial distress. The objective of the research was to find out and to analyze the influence of leverage and financial distress on profit management with good corporate governance as moderating variable in banking companies in Indonesia. The research used descriptive explanatory method. The data were gathered by conducting documentary study. The population was 42 banking companies listed in BEI (Indonesia Stock Exchange) and the population target was 30 companies. The gathered data were analyzed by using path analysis with E-views 7.0 Software program. The result of the first model showed that leverage and financial distress simultaneously had positive and significant influence on profit management in banking companies in Indonesia at the coefficient determination (R2) of 0.1243 or 12.43%. Partially, leverage had positive and significant influence on profit management, and financial distress had negative but significant influence on profit management in banking companies in Indonesia. The result of the second model showed that institutional ownership as moderating variable could not weaken and strengthen the influence of financial distress on profit management and was considered as potential moderation. The result of the third model showed that managerial ownership as moderating variable could weaken the influence of leverage on profit management and was stated as quasi moderation. It can also weaken the influence of financial distress on profit management and was stated as quasi moderation. The result of the fourth model showed that independent commissioners as moderating variable could not weaken or strengthen the influence of leverage on profit management as was stated as potential moderation. Independent commissioners as moderating variable could not weaken or strengthen the influence of financial distress on profit management and was stated as moderating predictor.
Authors and Affiliations
Anugerah Iman, Isfenti Sadalia, Khaira Amalia Fachrudin
Keywords
Related Articles
- EP ID EP239592
- DOI -
- Views 86
- Downloads 0
e-CRM and Loyalty: A Mediation Effect of Customer Experience and Satisfaction in Online Transportation of Indonesia
Sharing economy inspire people to share resources to produce more efficient economies. In Indonesia, Sharing economy is predicted to grow rapidly and become a very promising business model in the future. One of the most...
Attaining Sustainable Growth in Nigeria: Any Role for Solid Mineral Development?
Using time series such as GDP per capita, solid minerals output, foreign trade balance, domestic interest rate, inflation, and gross domestic savings, for the period 1960-2015. the Linear Growth Regression model adopted...
Market, Sales and Marketing Key Performance Indicators for Products of Additive Manufacturing Processes
Additive manufacturing processes – particularly 3D printing – have experienced a huge amount of development in recent years and they will represent one of the leading production technologies of our time in the coming yea...
Inflation Persistence in the West African Commonwealth Countries
The study examined the persistence of inflation in the West African Commonwealth Countries (WACCs). The methods used include the simple average method, the conventional unit-root test, the first coefficient of the autore...
Online Advertising Impact in the Bio Products Decision Purchase Process
As time passes by, people have become more and more interested in a healthy lifestyle. This is due to a number of external factors (stress, fatigue, sedentariness) that harm the general health of the body. The main idea...