Proceedings of the 1st International Conference on Finance Economics and Business, ICOFEB 2018, 12-13 November 2018, Lhokseumawe, Aceh, Indonesia

Research Article

The Effect of Political Connection and Earnings Management on Management Compensation

Download61 downloads
  • @INPROCEEDINGS{10.4108/eai.12-11-2018.2288769,
        author={Riky Rizki Junaidi and Sylvia Veronica Siregar},
        title={The Effect of Political Connection and Earnings Management on Management Compensation},
        proceedings={Proceedings of the 1st International Conference on Finance Economics and Business, ICOFEB 2018, 12-13 November 2018, Lhokseumawe, Aceh, Indonesia},
        publisher={EAI},
        proceedings_a={ICOFEB},
        year={2019},
        month={10},
        keywords={political connection earnings management management compensation},
        doi={10.4108/eai.12-11-2018.2288769}
    }
    
  • Riky Rizki Junaidi
    Sylvia Veronica Siregar
    Year: 2019
    The Effect of Political Connection and Earnings Management on Management Compensation
    ICOFEB
    EAI
    DOI: 10.4108/eai.12-11-2018.2288769
Riky Rizki Junaidi1,*, Sylvia Veronica Siregar1
  • 1: University of Indonesia, Jl. Margonda Raya 16424, Indonesia
*Contact email: rikyrizkijunaidi@gmail.com

Abstract

This research aims to examine the direct effect of political connection and earnings management on management compensation as well indirect effect of political connection on management compensation through earnings management. There were three measures of earnings management used in this research, namely accrual, real, and aggregate earnings management. Samples of this research are non-financial companies listed in Indonesia Stock Exchange in the period of, 2014-2016 with 337 observations. We find that real earnings management has a significant positive effect to management compensation. However, there is no evidence that political connection has an influence on earnings management and political connection on management compensation. Moreover, there is no evidence on the indirect effect of political connection on management compensation through earnings management.