The effect of institutional ownership, debt covenant and tax planning on earnings management (study on basic industry and chemical companies listed on the Indonesia Stock Exchange in 2017–2019)

Abstract

This study aims to examine and analyze the effect of institutional ownership, debt covenants, and tax planning on earnings management in basic and chemical industrial companies listed on the Indonesia Stock Exchange in 2017–2019. The population in this study is the Basic Industry and Chemical Sector. The sample selection technique used was purposive sampling and it obtained 42 companies for the 2017–2019 period, so that a sample of 126 observations was obtained. The data analysis method in this study is panel data regression using Eviews 9 software. The results show that institutional ownership has a negative effect on earnings management, debt covenants have a positive effect on earnings management, and tax planning has a positive effect on earnings management. These results indicate that all hypotheses proposed in this study are accepted.