Abstract
Earnings management is still an interesting focus of research from year to year. Research does not only focus on conventionally based entities but also moves to Sharia entities. This study aims to investigate the effect of firm value and financial performance on earning management. From the 20 sharia issuers that were successfully analyzed as samples, we found that, in general, there is no strong evidence that Islamic issuers practice earnings management, this can be seen from the positive average discretionary accruals. Referring to the discussion of the influence of firm value as measured by Tobin’s Q on the practice of earnings management, it was concluded that firm value had a significant effect on earnings management practices. This research has two contributions. Firstly this research is expected to contribute to market-based accounting research. Secondly, this study provides evidence of earnings management practices for Islamic entities.
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