Influence of Dividend Policy, Firm Size, Bonus Compensation and Corporate Governance Practices on Earnings Management

Abstract

This study aims to determine the empirical evidence of dividend policy, firm size, bonus compensation, and corporate governance practices on earnings management in manufacturing companies. The dividend policy uses the Dividend Payout Ratio, and company size is measured from the company's total assets' natural logarithm. The bonus compensation is calculated using dummy variables. Corporate governance is measured by three variables: independent commissioners, audit committee, and audit quality. The sampling method used was purposive sampling technique, and the analysis process used multiple regression analysis. The research sample was 33 sample companies. This study's results indicate that the variables that have a significant effect on earnings management are dividend policy and the proportion of the independent board of commissioners. The dividend policy variable shows positive results, meaning that if the company provides high cash dividends to shareholders, earnings management practices will also be higher. The proportion of independent commissioners variable shows positive results, meaning that the more influential the balance of independent commissioners, the higher the earnings management. The variables of firm size, bonus compensation, audit committee, and audit quality have no significant effect on earnings management.