The effect of managerial ability towards Earning Quality with audit committee as moderating variable

Abstract

The purpose of this research is to examine the effect of managerial ability towards earnings quality with audit committee as the moderation variable. The research data is secondary data, which is data from the audited financial statements of 53 go public manufacturing companies in Indonesia with 159 units of analysis for the period of 2014-2016. Data is obtained from the Indonesian Capital Market Directory. The results show that (i) managerial ability has a positive and significant effect towards the earnings quality; (ii) The macro condition represented by the interest rate has a negative and insignificant effect towards earnings quality; (iii) The audit committee strengthens the effect of managerial ability towards earnings quality. This research contributes to enrich the earnings quality literature, especially about the role of managers, which is managers are not the absolute profit management actors, but capable managers create efficiency and improve earnings quality.