Differences In Earnings Management Research Articles

Determinant of Earnings Management Pre and Post PSAK 109 in Indonesian Banks

This study aims to determine the differences in Earnings Management and the effect of Institutional Ownership, Managerial Ownership, Audit Committee Competencies, Capital Adequacy Ratio (CAR), and Nonperforming Loan (NPL) on Earnings Management proxied by Discretionary Loan Loss Provision (DLLP) pre and post-PSAK 109 implementation in Indonesian bank listed on the Indonesian Stock Exchange (IDX). This study uses Ordinary Least Square (OLS) regression and Wilcoxon signed-rank test to test the hypothesis. The study used the period pre and post implementation of PSAK 109. We traced each bank's financial report listed on the IDX from 2017 to 2020 to anticipate early implementation. Using purposive sampling, we obtained 40 pre-PSAK 109 and 40 post-PSAK 109 bank samples. This study found no difference in earnings management pre and post-PSAK 109. Institutional Ownership, Managerial Ownership, and Audit Committee Competencies do not affect Earnings Management pre and post-PSAK 109. NPL is positively related to Earnings Management pre and post-PSAK 109, and CAR is positively related to Earnings Management pre-PSAK 109 but has no effect on Earnings Management post-PSAK 109. This study provides additional information for standard setters and OJK regarding monitoring earnings management practices in banking pre and post-PSAK 109.

Earnings Management Before, During and After Covid-19 Period in the Hotels and Tourism Subsector Subsector Listed on the Indonesian Stock Exchange

Covid-19 has an impact on the decline in firms performance. Several previous studies have found that companies strive to sustain performance through earnings management practices. Earnings management that can be performed in a company includes accrued earnings management and real earnings management. Previous studies have only focused on the differences in earnings management during the pandemic using accrual earnings management. So that in this study, apart from using accrual earnings management, it also adds real earnings management. This study aims to offer empirical insight into variations in earnings management during the Covid-19 period. This duration is divided into three distinct phases: pre, during, and post-Covid. Focusing on the 2017-2022 timeframe, this study specifically examines companies in the hotels and tourism subsector. The hypothesis was tested with a paired sample t-test. The findings showed no disparity in accruals earnings management in the pre, during, and post-Covid periods. However, the analysis showed significant differences in abnormal real earnings management related to production and discretionary factors before, during, and after the Covid-19 outbreak. Notably, abnormal real earnings management in production remains consistent before and after, as well as during and after the pandemic. In addition, discretionary abnormal real earnings management shows no difference before and during Covid-19 or during and after the pandemic. The practical implication is that post-Covid-19 pandemic firms actually carry out higher real earnings management as an effort to maintain or as a result of the decline in firms performance during the Covid-19 pandemic.

Analisis Perbedaan Tingkat Manajemen Laba Dan Profitabilitas Sebelum Dan Sesudah Akuisisi

This study aims to determine whether there is a difference between before and after making an acquisition in the 2011-2019 period by analyzing earnings management and profitability four years before and four years after. This study uses secondary data from the Indonesia Stock Exchange (BEI) in the form of financial reports. The method of determining the sample is by purposive sampling, obtained a sample of 8 companies. The analysis technique used in this study was the Wilcoxon signed test because the data after the normality test was not normal. Based on the analysis, it is found that earnings management as measured by discretionary accruals has a significant difference between before and after making an acquisition, and for profitability as measured by return on equity (ROE) there is also a significant difference between before and after making an acquisition. Thus it can be concluded that there are differences in earnings management and profitability between before and after making an acquisition.

Earnings Management and Tax Aggressivity before and During the Covid-19 Pandemic (an Evidence from Indonesia)

Companies facing financial crises tend to manipulate reported earnings in unfavorable markets. Earnings management is an effort to manage earnings by managers to meet the expected profit level to obtain personal gain. The Covid-19 pandemic has caused the government to issue various tax incentives that individuals and companies can utilize. Under these conditions, management as an internal party can manage earnings to meet its expectations. This study examines differences in earnings management before and during the Covid-19 pandemic and the effect of earnings management on tax aggressiveness. The data from this study are the financial statements of manufacturing companies listed on the Indonesia Stock Exchange. The sampling method is purposive sampling. The analytical method used is the comparative test and multiple regression analysis. The results of this study are the same in the level of tax avoidance, accrual earnings management, and actual management before and during the Covid-19 pandemic. This study also concludes that real earnings management negatively affects tax aggressiveness, while accrual earnings management does not. This research indicates that the government needs to increase supervision and control over the possible tax avoidance that companies can carry out. While accrual earnings management does not. This research indicates that the government needs to increase supervision and control over the possible tax avoidance that companies can carry out. While accrual earnings management does not. This research indicates that the government needs to increase supervision and control over the possible tax avoidance that companies can carry out.

Financial distress and accrual and real earnings management in Polish public companies

Purpose: The study aims to assess differences in accrual and real earnings management strategies between financially distressed and non-distressed companies. The research sample includes public non-financial companies in Poland.Methodology/approach: Based on the GICS classification, cross-sectional regressions were estimated. Abnormal accruals were calculated using the Jones model and the modified Jones model. Based on Roychowdhury, real earnings management was proxied: abnormal operating cash flow, abnormal production costs, and abnormal discretionary expenses. Symptoms of financial difficulties were observed with discriminant analysis, net working capital strategy and ability to pay interest. Parametric and non-parametric statistical tests were used.Findings: There were statistically significant differences in earnings management between non-distressed and distressed companies. Financially healthy companies, as well as those with conservative net working capital strategies and a good ability to pay their interest, were more likely to manage earnings. However, they used selected to influence through real transactions.Research limitations/implications: Proxies for earnings management and financial difficulties are commonly recognized in the literature, but none of them is without imperfections. Therefore, many alternative research approaches have been used.Originality/value: Previous Polish research has not addressed the relationship be-tween earnings quality and financial distress. Multiple robustness tests were imple-mented.

How Deep is your Bath? Cross-Country Differences in Earnings Management Following CEO Turnovers

How Deep is your Bath? Cross-Country Differences in Earnings Management Following CEO Turnovers

MANAJEMEN LABA PADA PERBANKAN KONVENSIONAL DAN PERBANKAN SYARIAH

Financial reporting using an accrual basis is preferred by conventional and Islamic banking because it is considered rational and fair in reflecting the company's financial condition although it can also provide flexibility to management in choosing accounting methods for certain purposes or earnings management. Based on the previous literature review regarding earnings management in both Conventional Commercial Banks and Islamic Commercial Banks, it is seen that the practice of earnings management is very likely to be carried out by managers as managers. The purpose of this study was to identify and analyze the differences in earnings management by conventional commercial banks and Islamic general banks. The type of data source used in this study is secondary data derived from audited published financial reports on Islamic Commercial Banks and Conventional Commercial Banks registered with the Financial Services Authority in Indonesia during the research period from 2014 to 2019. This study uses Earning Management as a variable measured by the Modified Jones Model. From this research, it can be concluded that there is a difference between the discretionary accrual ratio of conventional banks and the ratio of discretionary accruals of Islamic banks. Where Conventional Banks are higher in earning management than Islamic Banks.

The Impact of Earnings Management on the Value of Companies – The Role of Ownership Structure

The aim of our paper is to test whether there is a relationship between earnings management and the market value of companies with different ownership structures. Additionally, we examined whether ownership control determines earnings management. Our study was conducted on 632 non-financial companies listed on the Warsaw Stock Exchange between 2013 and 2020. We have assessed panel data models showing that there is no relationship between earnings management and company value. However, there is a negative and statistically significant relationship for companies without a majority direct investor. We also showed that, despite the different impact of manipulation on company value, there are no statistically significant differences in earnings management between companies with different ownership structures. The originality of our study lies in conducting an analysis of earnings management taking into account the degree of ownership control.

Can a not-for-profit minority institutional shareholder make a big difference in corporate governance? A quasi-natural experiment

In this study, we examine the effectiveness of the China Securities Investor Services Center (CSISC), a new minority shareholder protection mechanism promoted by the China Securities Regulatory Commission, in constraining earnings management. Employing a difference-in-differences analysis for a sample of Chinese listed companies during 2015–2017, we find that CSISC shareholding reduces earnings management. We also find that this effect exists in firms with weaker internal or external corporate governance mechanisms and in firms without political connections. The additional analyses show that the difference in earnings management between the treatment firms (i.e., CSISC-holding firms) and control firms is diminishing after the CSISC shareholding pilot program was promoted nationwide, and that CSISC shareholding also constrains controlling shareholders' tunneling. Our findings have important policy implications for emerging markets that attempt to improve minority shareholder protection.

Parallels and Differences in Earnings Management of the Visegrad Four and the Baltics

Earnings management is a legal and widely preferred phenomenon of business finance that financial managers use to maintain and improve the enterprise’s competitiveness. Managers purposely manipulate business earnings to achieve the required status of the enterprise. The consequence of these activities is to provide a positive perspective for the owners, encourage the profitability for the creditor and the investors as well as demonstrate economic strengths to competitors. This article aims to identify parallels and differences in earnings management of enterprises in the Visegrad Four and the Baltics in terms of competitiveness for the nineyear period 2010-2018. The research uses a final sample of 4,543 observations from the EBITs of Slovak, Czech, Hungarian and Polish enterprises as well as 1,633 observations from the EBITs of Latvian, Lithuanian and Estonian enterprises. Time-series methods with all necessary assumptions have been run for the analyzed financial dataset. The results of the econometric modeling of unit roots show significant parallels in these groups of countries. The enterprises from the Visegrad group and the Baltics group use the apparatus of earnings management to be competitive. The obtained results confirm the systematic but legal manipulation from the side of management. A quantitative analysis of homogeneity tests using 1,000,000 Monte Carlo simulations indicates significant time differences of manipulation in these emerging countries. The year 2014 signaled a radical “accelerando” in earnings management for the V4, and the year 2016 is highlighted for the Baltics.

ANALISIS KOMPARASI MANAJEMEN LABA, PROFITABILITAS, DAN NILAI PERUSAHAAN SEBELUM DAN SESUDAH IMPLEMENTASI PSAK 69

PSAK 69 is the accounting standard resulting from IFRS adoption related to agricultural activities that is effective as of January 1, 2018. This study aims to examine and analyze differences in earnings management, profitability, and value of firm before and after the implementation of PSAK 69. The population of this study is agricultural companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2018 period. The sample selection technique uses a purposive sampling method and the sample that meets the criteria is 17 companies with 34 observational data. The type of data in this study is secondary data. This type of research is quantitative research with a comparative approach. Hypothesis testing in this study using paired sample t-test. The results of this study indicate that there are differences in earnings management before and after the implementation of PSAK 69, while for profitability which is proxied by Return On Assets (ROA) and firm value there is no difference before and after the implementation of PSAK 69.Keywords: earnings management, profitability, PSAK 69, value of firm.

Kebijakan Stock Split Perusahaan Non-Financial Di Indonesia: Manajemen Laba, Kinerja Operasi, Kinerja Pasar

The stock split policy shows the success of managers in managing the company. The condition of managers who have perfect information compared to shareholders, stock split policies may coincide with certain motives carried out by managers. This study examines differences in earnings management, operating performance, and market performance before and after the company conducts a stock split. This study employs secondary data sourced from www.idx.co.id, www.idnfinansials.com, and www.finance.yahoo.com. The data employed consists of data and information from financial statements and stock prices of non-financial companies listed on the Indonesia Stock Exchange from 2013 to 2019. The sample used in this study amounted to 64 observations based on purposive sampling. The data analysis test used the normality test and the Wilcoxon matched-pairs test. This study concludes that earnings management and market performance increase after the company's stock split is carried out. Meanwhile, operating performance did not experience any difference before and after the stock split was carried out. This study proves that managers employ the moment stock split to carry out earnings management for certain motives, even though the market participants positively respond to these actions. The companies that carry out stock splits should make these events to improve their operating performance. This study indicates that the Financial Services Authority needs to review companies with plans to conduct a stock split to protect investors in the capital market

COVID-19 IN INDONESIA: ANALYSIS OF DIFFERENCES EARNINGS MANAGEMENT IN THE FIRST QUARTER

The COVID-19 pandemic, which began in the first quarter (Q1) of 2020 in Indonesia, has certainly had a major impact on the company’s financial performance. The first-quarter financial report should have been able to show the actual condition of the financial company because it can be a projection for investors and analysts regarding the company’s performance in the next period. Unfortunately, many gaps in financial reporting that can provide space for management to commit earnings management. This study aims to prove the difference in earnings management in the Q1 of 2020, namely the period after the COVID-19 pandemic with the Q1 of 2019, namely the period before the COVID-19 pandemic. The data type of the research is secondary data using the financial statements of companies listed on the Indonesian Stock exchange in the Q1 of 2018, the Q1 of 2019, and the Q1 of 2020. The Q1 of 2018 is needed in this research related to the search for the Q1 of the year of 2019 data. Hypothesis testing was conducted using the Wilcoxon test with SPSS 25 software. This research has proven that there is a difference in earnings management in the Q1 of 2019, namely before the COVID-19 pandemic, and the Q1 of 2020, named after the COVID-19 pandemic. The level of earnings management during the COVID-19 pandemic represented in the Q1 of 2020 was lower than the earnings management in the period before the COVID-19 pandemic, namely in the Q1 of 2019.

Loan loss provision models in Brazilian banks

Purpose This paper investigates which loan loss provision (LLP) model [International Accounting Standards39 (IAS39) based on incurred losses and Brazilian Central Bank Generally Accepted Accounting Principles (GAAP) based on a mixed model] presents higher quality in terms of predictability, and which model is less susceptible to earnings management practices using LLP. Design/methodology/approach To test the difference between the explanatory power of the mixed model and incurred loss model in explaining the LLP, this paper runs a two-stage fixed-effect panel regression model to evaluate the association between LLP of each model and variables representatives of non-discretionary aspects related to the quality of the loan portfolio, business cycles and qualitative evidence indicated in each GAAP. Then, this paper tests the relationship between the errors generated in each regression and the discretion of bank managers and banks’ characteristics. Findings This paper finds that the mixed model results in higher R2 demonstrating that the number produced under this regime is more related to observable variables than the number produced under the incurred losses model. Further, this paper finds no evidence that there is a difference in earnings management between the two standards and this paper does not find that banks manage earnings through regulatory capital. Nevertheless, this paper finds that earnings management is higher in private than in listed banks. Originality/value This paper takes advantage of the unique feature of the Brazilian Central Bank regulation to investigate the impact of two different accounting standards on LLP in a perfect setting.

Apakah Manajemen Laba di Bank Syariah Berbeda dengan Bank Konvensional?

This research is in the form of quantitative correlation. The correlation method is a research method with the aim of describing two or more facts and also the properties of the object being studied. This study aims to determine the differences in earnings management in Islamic banks with earnings management in conventional banks registered with the Financial Services Authority from 2015-2019. The data used in this study are the annual reports of Islamic banks and conventional banks registered with the Financial Services Authority for the period 2015-2019. The data sampling method uses purposive sampling method based on certain criteria. Based on the criteria used, the researcher obtained a sample of 34 banks. Testing the hypothesis in this study using multiple regression analysis and coupled with a different test (independent sample t-test). The results showed that there is a difference between earnings management in Islamic banks and conventional banks. Earnings management in Islamic banks is lower than conventional banks. Keywords: Conventional bank, Islamic bank, Earnings management.

Earnings Management in Companies that Missed and Beat Analyst Consensus

The aim of this study is to analyze the differences of earnings management between companies that missed and beat analyst consensus. Nonfinancial companies listed in the Indonesia Stock Exchange in 2017–2018 and have analyst consensus data available are used as the research sample, which consist of 28 companies observed for four quarters. The final sample in the analysis consists of 94 observations (firm-quarters). The independent sample t-test is used for data analysis. Results show that companies that missed analyst consensus have greater discretionary accrual than the group of companies that beat analyst consensus. Therefore, differences in earnings management between companies that missed and beat analyst consensus exist. Companies that missed analyst consensus are more inclined to conduct earnings management in the following period. This finding opens the possibility to develop a new hypothesis in the positive accounting research framework.
 Keywords: Analyst Consensus; Missed and Beat; Earnings Management.

Analiza upravljanja obračunskim komponentama dobitka u velikim preduzećima Republike Srbije

This study analyzes systematic differences in earnings management across 215 large companies operating in the real sector in the Republic of Serbia in the period from 2009 to 2017. To achieve the main goal of the study, we constructed an aggregate measure which covers several aspects of accrual-based earnings management. The results indicate that the accrual-based earnings management, which is immanent to economies with underdeveloped capital markets, weak investor protection and frequent changes in the regulatory framework coupled with inefficient judiciary, is widespread among large Serbian companies. Having found significant differences in the levels of earnings management across companies, we examined the mean values of the aggregate earnings management measure for numerous categorical variables in order to identify whether individual company characteristics are related to incentives for aggressive exploitation of accounting discretion.

Central Environmental Protection Supervisor, Nature of Property Rights and Corporate Financial Performance

After the central environmental protection inspector, the external environmental regulatory environment facing enterprises has undergone tremendous changes. This paper uses the double-difference method, using data from Shanghai and Shenzhen A-share listed companies from 2013 to 2017, to empirically test the impact of the central environmental protection inspector and its mechanism. The research results show that the financial performance of listed polluting companies has significantly improved after the central environmental supervision, but the improvement of financial performance has heterogeneity of property rights, and state-owned enterprises are significantly higher than non-state-owned enterprises. Further analysis shows that there is significant positive earnings management in state-owned listed polluting enterprises, while non-state-owned enterprises are not. This paper analyzes the impact of the central environmental protection inspector on the production and operation of the enterprise in a timely manner, and beneficially supplements the differences in earnings management of heavily polluting enterprises in the procyclical period, and supplements relevant literature.

A New Perspective on Earnings Management in Emerging European Countries: Investigation on Environmental Factors that Explain Differences in Earnings Management

This paper presents a new perspective on earnings management analyzing and comparing emerging European countries in the presence of environmental factors of developing countries. We provide empirical evidence on differences in the extent of earnings management across countries. Developing Eastern European countries experienced important changes. They have been in transition over the past decade, and remain making great strides to overcome the drag exerted by their communist heritage. Nevertheless, the studies on earnings management based on emerging economies are rare and hardly pursued due to the presence of institutional and regulatory differences between developed and emerging economies. Therefore, the present study fulfils the important gap in earnings management literature related to developing countries. Our results confirm that managers from different emerging European countries manage earnings differently. Additionally, we identify that there is not a sole reason affecting the managers’ decisions, but a significant number of circumstances and characteristics. Whether a firm’s environment offers more protection or is characterized by a higher level of development, higher foreign investments, it helps to limit the earnings management. In addition, when accounting and tax are not as strongly aligned with market approach as expected, it also limits the earnings management behaviour of managers.

Institutional Factors and Earnings Management in the Asia-Pacific: Is IFRS Adoption Making a Difference?

We investigate whether variations in earnings management in the Asia-Pacific region countries can be explained by the extent of IFRS adoption having regard to the diversity of cultures across countries in the region and the degree of accounting standards enforcement. Across 17 key countries in the region, we find that IFRS convergence is associated with reduced levels of earnings management, particularly in recent years when IFRS has been increasingly adopted by publicly listed firms in the region. Nevertheless, the influence of cultural values and the degree of accounting standards enforcement remain significant and persistent institutional factors explaining international differences in earnings management.