Abstract
The objective of this research is to examine whether debt covenant and financial condition influence earnings management. Earnings management that used in this research consists of income increasing earnings management (1) and income decreasing earnings management (0). Sample consists of 71 manufacturing companies that were listed at Jakarta Stock Exchange (now, Indonesia Stock Exchange) since 1997-2003. Hypotheses are examined by using logistic regression. The results show that financial condition influence income increasing earnings management, but there is no significant influence between firms with debt covenant and income increasing earnings management.
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