Proceedings of the 2nd International Conference of Multidisciplinary Studies, ICMS 2023, 12 July 2023, Semarang, Indonesia

Research Article

Earnings Management: an Integrated Analysis of Political Connections and Corporate Governance

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  • @INPROCEEDINGS{10.4108/eai.12-7-2023.2340954,
        author={Aprilia  Sari and Maria Goreti Kentris Indarti and Jacobus  Widiatmoko and Sunarto  Sunarto},
        title={Earnings Management: an Integrated Analysis of Political Connections and Corporate Governance},
        proceedings={Proceedings of the 2nd International Conference of Multidisciplinary Studies, ICMS 2023, 12 July 2023, Semarang, Indonesia},
        publisher={EAI},
        proceedings_a={ICMS},
        year={2023},
        month={12},
        keywords={earnings management political connection ownership structure audit quality},
        doi={10.4108/eai.12-7-2023.2340954}
    }
    
  • Aprilia Sari
    Maria Goreti Kentris Indarti
    Jacobus Widiatmoko
    Sunarto Sunarto
    Year: 2023
    Earnings Management: an Integrated Analysis of Political Connections and Corporate Governance
    ICMS
    EAI
    DOI: 10.4108/eai.12-7-2023.2340954
Aprilia Sari1,*, Maria Goreti Kentris Indarti1, Jacobus Widiatmoko1, Sunarto Sunarto1
  • 1: Accounting Department, Faculty of Economics and Business, Universitas Stikubank Semarang, Indonesia
*Contact email: apriliasari6011@mhs.unisbank.ac.id

Abstract

This study aims to determine the effect of the independent research variables: political connections, auditor quality and foreign ownership, on the research dependent variable, namely earnings management. Previous studies have shown results that are not consistent with one another, so this study tries to include a moderating variable, namely foreign ownership. The research also uses three control variables: company size, ROA and leverage ( DAR). The research uses secondary data sourced from Financial Statements or Annual Reports published by manufacturing sector companies that have gone public in the 2019-2021 period. With the purposive sampling method, 306 research data were obtained which had to be outlier is 7 data so that the total sample at the end of the study was 299 data. Foreign ownership can weaken the positive relationship between political connections and earnings management. Meanwhile, foreign ownership does not weaken or strengthen the negative (-) relationship between auditor quality and earnings management. This research is expected to be a reference in further research and a basis for making company decisions. To suppress earnings management practices, quality auditors can be used and foreign investors can bring in companies that have strong political connections so that the impact of political connections can be weakened.