Fraud Risk and Earnings Management

Abstract

Earnings management is an effort made by management with the aim of managing financial statements within the limits permitted by accounting principles with the aim of the manager's personal interests. The purpose of this study was to examine the effect of fraud risk factors on earnings management behavior. Variables that are thought to influence earnings management are financial stability, financial targets, external pressure, effective monitoring, organizational structure, and auditor switching. The samples obtained were 37 companies registered in 2014-2017 using multiple regressions. The results showed that the variables of financial stability, external pressure, effective monitoring, organizational structure and auditor switching did not affect earnings management while the financial target variables negatively affected earnings management.