Financial Ratio and Company Characteristics Effect on Earnings Management

Abstract

This research aimed to acquire an empirical evidence regarding the effect of growth, financial leverage, fixed-asset turnover, profitability, firm size, firm age, audit quality, board independence, and managerial ownership as independent variables, on earnings management as a dependent variable. This research uses non-financial companies listed in Indonesia Stock Exchange (IDX) during 2016 to 2018 as population. Samples for this research were obtained through purposive-sampling method, in which 516 non-financial companies with 354 data were taken as samples. Multiple linear regression and hypothesis tests were used as data analysis method in this research. The results show that growth positively affects earnings management. This indicates that companies experiencing higher growth tends to improve earnings management practice. Meanwhile, the other variables do not have effect on earnings management.