The Effect of Information Asymmetry and Debt on Accrual Earnings Management: Firm Size as a Moderating Variable

Abstract

One of the opportunistic manager practices is earnings management. This attitude arises because of the high asymmetry of information between the principal and manager, weak regulation and control. If information asymmetry is high, stakeholders do not have sufficient resources, incentives or access to relevant information to monitor managers' actions. Through the size of the company is expected to see how big the influence of information asymmetry and debt on earnings management actions. This research is included in the third TKT measurement, namely proof-of-concept of important functions and/or characteristics analytically and experimentally. This study aims to examine the impact of the interaction of information asymmetry and debt on earnings management through accrual of working capital with firm size as a moderating variable. This study uses quantitative methods with crosssectional data. This study uses secondary data in the form of financial statements of consumption sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2015 to 2021. The results prove that DER has a positive effect on earnings management and company size is able to moderate the effect of DER on earnings management. However, information asymmetry has no effect on earnings management and firm size is not able to moderate the effect of information asymmetry on earnings management.