Abstract
Abstract The purpose of this study was to see how the effects of earnings management on the performance of companies with audit quality and size of the company as a moderating variable. High Quality Audit demonstrated with large or small public accounting firm. The size of the company can be seen from how many assets owned by the company itself. The sample in this study is based on purposive sampling, with specific criteria that a manufacturing company listed on the Stock Exchange during the period 2011-2014 which publishes annual financial statements (annual report) in complete accordance with the measurement variables to be studied in this research, manufacturing company whose financial statements are audited by KAP Big 4 and non- Big 4. So in the get the 22 companies audited by the Big 4 accounting firm and the 28 companies audited by KAP Non Big 4. The results of this study variable Profit Management significant negative effect on the performance effect Perusahaan. VariabelCompany’s Size significantly strengthen the positive relationship between Profit Management with Corporate performance. Variable Audit Quality significant positive effect strengthens the relationship between the Profit Management with Corporate Performance.
Highlights
Financial statement is something important for the company
Information on the company’s earnings is important and often manipulated so that financial statements no longer reflect the actual condition of the company
The results showed that audit quality could affect the relationship between earnings management and cost of equity capital
Summary
Financial statement is something important for the company. Financial statement shows the results of the company’s performance and is the management accountability to the company’s owner. Based on the financial statement, the company’s performance is usually assessed based on the income earned by the company. Information on the company’s earnings is important and often manipulated so that financial statements no longer reflect the actual condition of the company. According to Statement of Financial Accounting Concept (SFAC) No 1, earnings information is a major concern to estimate the performance or accountability of the management. The awareness of management in generating earnings can lead to deviant behavior by managers in order to produce earning. This deviant effort is commonly called earnings management
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