Authors:
Indra Arifin Djashan
and
Ade Lawira
Affiliation:
STIE Trisakti, Indonesia
Keyword(s):
Earnings Management, Financial Ratio, Company Condition, Company Ownership, Operating Cash Flow, Indonesia Stock Exchange.
Abstract:
Recently, high-level scandals and financial crises that have occurred in several countries have brought issues of corporate governance to the forefront of developing countries, emerging markets and transitional economies. This scandal shook the integrity of accounting information and resulted in a decline in investor confidence. This has made the company need to achieve significant progress to carry out corporate governance to restore investor confidence in the quality of financial reporting. To achieve this, this paper proposes a conceptual framework to investigate the relationship between financial ratios (profitability, leverage and operating cash flow), ownership (Institutional ownership and managerial ownership), and company condition (board size, firm size, sales growth) to earnings management among manufacturing companies listed on the Indonesia Stock Exchange (IDX). Evidence from previous research shows that the company's financial ratios (profitability) that have large profi
ts and meet targets has very little chance of manipulating earnings.
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