Determinants of Earnings Management on the Moderating Role of GCG: Empirical Evidence on the BEI Non-Financial Sector

Abstract

This study investigates the impact of financial leverage (FL) and free cash flow (FCF) on earnings management, with good corporate governance (GCG) as a moderating factor. Using data from 352 non-financial firms listed on the Indonesia Stock Exchange (2020-2023) and analyzed with SPSS 25, the findings reveal that both FL and FCF have a significant positive effect on earnings management. The practical implications of this study suggest that company management should minimize earnings management practices and focus on achieving sustainable long-term goals through effective implementation of GCG. This study focuses on non-financial companies, considering that this sector is more dominant during the study period than the financial sector. In addition, non-financial companies are recorded as the largest dividend contributors, thus providing a relevant context for examining earnings management practices and the role of GCG.