The role of the audit committee to increase the influence of audit quality and internal control on earnings management (original) (raw)
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The Role of Audit Committee Characteristics and Audit Quality in Improving Earnings Quality
Dinamika Akuntansi Keuangan dan Perbankan
The purpose of this study was to examine the effect of the effectiveness of the audit committee, as measured by committee size, number of meetings, and competence, as well as audit quality on earnings quality with firm size, leverage, and profitability as control variables. The population of this study is all manufacturing companies listed on the Indonesia Stock Exchange in 2018-2020. The sample selection method used purposive sampling and 292 data were obtained. The results of hypothesis testing with multiple linear regression showed that the size of the audit committee and audit quality had a positive effect on earnings quality. Meanwhile, the number of meeting and competence has no effect on the quality of earnings. Furthermore, all control variables affect earnings quality.
2016
Indonesia began to implementeconomic and tax reforms. Accordingly, it is important to explore further howmanagers of manufacturing companies listed on Indonesia Stock Exchange engagein earning management. Audit quality was measured by two different proxies;i.e., audit firm size and industry specialist auditors, while earningsmanagement was measured by discretionary accruals. Meanwhile, leverage, firmsize, and operating cash flow served as control variables. The sample involvedin this study comprises of manufacturing companies listed on the IndonesiaStock Exchange; covering 420 firm-year observations from the fiscal years 2010to 2013. This study applied a Multiple regression analysis in estimating therelationship between the audit quality and earning management. As hypothesizedin this study, the results showed that audit quality and earning management arenegatively related. The findings advance the current knowledge pertaining toaudit quality and earning management relationship in th...
Audit quality, audit opinion, and earnings management: Indonesian evidence
Journal of Business and Information Systems (e-ISSN: 2685-2543)
This research investigates the role of audit quality as moderation on the association between audit opinions and accrual earnings. The sample used in this study is Indonesian companies listed on the Indonesian Stock Exchange (IDX) during 2016-2020. The study uses Generalized Least Squares (GLS) regression models to process data. The results show that audit opinions are positively associated with earnings management. When audit quality is examined individually, it negatively affects earnings management. Moreover, when it interacted with audit opinions, the interaction variables negatively affect earnings management. This study contributes to the current literature about auditing and earnings management practices as well as the initial work to investigate the relationship between audit opinion and earnings management, by involving audit quality as a moderation. This study enriches the existing literature about audit opinion, audit quality, and earnings management, especially in the context of an emerging market.
The Effect Of Audit Quality And Earnings Management On Firm Performance
Proceedings of the 1st International Conference on Applied Economics and Social Science (ICAESS 2019), 2019
This study aims to examine the effects of audit quality on earnings management, audit quality and earnings management impact on the performance of nonfinancial companies listed in Indonesia Stock Exchange (IDX) period 2010-2015. Audit quality is proxy by auditor size, audit tenure and audit fees. The earnings management of discretionary accruals used modified Jones models by Dechow (1995), firm performance is proxy by Tobins'Q. The analysis technique used is the data panel regression analysis with EVIEWS software. The results of the study found are: firstly, that audit quality has no effect on firm performance, quality audit but has no effect on earnings management and earnings management has no effect on firm performance.
ABSTRACT : This study aims to examine the effect of the proportion of independent commissioners, the effectiveness of the audit committee, the quality of internal and external auditors on earnings management. The population of this research is State-Owned Enterpriseslisted on the IDX for the period 2016-2019. The sample obtained was 13 companies using the purposive sampling method. The analysis technique used is Multiple Linear Regression. Results show that the independent variables in this study simultaneously had a negative effect on earnings management. The proportion of independent commissioners and the quality of external auditors partially have a negative effect on earnings management. The effectiveness of the audit committee, the competence, and objectivity of the internal auditors do not have a significant effect on earnings management. Independent parties can carry out more optimal supervision, so it is suggested that the company can consider the appropriate composition of the seats on the independent board of commissioners and external auditors who can carry out their duties independently. Keywords: Independent Commissioner, Audit Committee, Internal Auditor, External Auditor, Earnings Management.
Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 2020
This study aims to examine the effect of managerial ownership, audit quality and audit committee on earnings management. The research was conducted at manufacturing companies in the consumer goods sector which were listed on the Indonesia Stock Exchange in 2014-2018. The sampling technique used purposive sampling technique and obtained 10 companies that became samples. Hypothesis testing is done by using multiple regression analysis. The results of this study indicate that: first, managerial ownership does not have a significant effect on earnings management. It can be seen that the t-count is smaller than the t-table (0.152 <1.678) with a significance value of 0.880> 0.05. Second, audit quality affects earnings management. It can be seen that the t-count is greater than the t-table (2.274> 1.678), with a significance value of 0.028 <0.05. Third, the audit committee has a significant effect on earnings management. It can be seen that the t-count is greater than the t-tab...
2019
This study was done to find out impacts of audit committee size, information asymmetry, operating cash flow and external audit quality on earnings management of manufacturing companies in Indonesia. Samples used were 35 of all manufacturing companies listed in the Indonesia Stock Exchange (IDX) in the period of 2011-2015. Audit committee size was determined by comparing the number of audit committee member in a company and the minimum requirement of audit committee member according to the regulation of Financial Services Authority (OJK). Information asymmetry, operating cash flow, and external audit quality were measured based on relative bid-ask spreads, total operating cash flow on the total company assets, and dummy variable of Big 4 and non-Big 4 accounting firms, respectively. The data obtained was analyzed by multiple linear regression analysis. The results indicated that independent variables simultaneously influence earnings management practice. Partially, operating cash flo...
Earnings Management: Evaluation of Audit Committee Activity in Indonesia
Substansi: Sumber Artikel Akuntansi Auditing dan Keuangan Vokasi
The paper is intended to provide evidence of the effect audit committee meeting, attendance meeting, size, appointment, audit quality, managerial ownership, firm size, leverage, profitability, operating cash flow and sales growth on earnings management. The population of the paper are public non financial companies from 2016 to 2018. The paper uses 85 samples selected through purposive sampling method, hence amounting to 255 firm year. The result indicates that audit committee size, managerial ownership, firm size, leverage, profitability, operating cash flow and sales growth statisticall influenced earnings management. Audit committee meeting, attendance meeting, appointment and audit quality have no influence toward earnings management. Audit committee size positively influenced earnings management by ineffeciency while they doing their task to monitor mangement when it is too large. Mangerial ownership positively influenced earnings management because manager have their self inte...
The Effect of Audit Committee Effectiveness on Earnings Management: Indonesian Evidence
2015
ABSTRACT Taufik Harris Edyna, S.E. NIM: S4312013 THE EFFECT OF AUDIT COMMITTEE EFFECTIVENESS AND AUDIT QUALITY ON EARNINGS MANAGEMENT INDONESIAN EVIDENCE The study aims to know the extent to which audit committee effectiveness and audit quality affect on earnings management in Indonesian listed manufacturing firms. Audit committee effectiveness is measured by audit committee features including competence, diligence, and independence. Audit quality is assessed by either audit firm size or industry specialization. This study utilizes the Cross-sectional Modified Jones Model since it is more likely to detect earnings management rather than other alternative models. The research uses secondary data from the Indonesia Stock Exchange and purposive sampling involving 85 manufacturing listed companies for the year 2011. Data analyses employ the descriptive statistics, multiple regression, and logistic regression to test the hypotheses. The main findings of the study show that audit committee independence is significantly negative associated with earnings management. In all models, this audit committee feature reduces earnings management consistently. In contrast, other audit committee characteristics and audit quality are less likely to undermine earnings management. In conclusion, audit committee independence is a crucial tool to minimize a likelihood of earnings management practices in Indonesian listed manufacturing firms. The results contribute more understanding regarding the effect of audit committee effectiveness and audit quality on earnings management in Indonesian manufacturing industry. The implications of the results are that government and regulators have more incentives to enhance audit quality so as to ensure financial reporting quality and in turn, improve the confidence of investors. Another implication, the findings also encourage policy makers to rule audit committee members that consist of all independent members as a response of the important roles of audit committee independence to mitigate earnings management. Keywords: audit committee effectiveness, audit quality, earnings management
The Effect of Audit Quality on the Earnings Management Activities
2012
The main purpose of this study was to investigate the effect of audit quality, measured by average clients' size of auditing firm, on the earnings management activities, measured by the value of discretionary accruals. This study was done controlling two moderating variables, which are the client importance and auditor’s name. Simple and Multiple Regressions were used to study the effects of audit quality on earnings management, and ANOVA was used for comparing the effects of auditor's name on the relation between audit quality and earnings management. The findings of the study indicated that audit quality has a relatively weak negative influence on discretionary accruals, and this, in turn, has a relatively weak negative influence on the manipulations done by management. The moderating variable client importance has no significant effect on the relationship between audit quality and discretionary accruals. So auditor’s name is the moderating variable. The researchers recomm...