The Effect of Board of Commissioners and Audit Committee Independence and External Auditor Brand Name on EarningsManagement  (Empirical Evidence from Indonesia)

Authors

  • Akrem Mohamed Daboba Author
  • Almhdi Abulgasim A Abusbayiha Author

Keywords:

earning management, the independent board of commissioner, independent of audit committee, auditor s

Abstract

 Managers can manipulate earnings in order to maximize their own interests or to signal their private information, thus influencing the informativeness of earnings. Accounting earnings are more reliable and more informative when managers’ opportunistic behavior is controlled through a variety of monitoring systems. Corporate governance mechanism can constrain earnings management. The objective of this study was to examine the effect of three corporate governance variables on earnings management practice of Indonesian public listed companies. Therefore, this study focused on the role of corporate governance structure (independent board of commissioner and audit, and auditor size) to reduce companies earnings management. Therefore, the study was aimed to reveal whether the independent board of commissioners affect earnings management, the independent of audit committee affect earnings management, and auditor size affect earnings management. The population of this study was all of Indonesian listed companies for the period 2008-2009. This study used purposive sampling technique with some criteria. The final sample consists of 124 firm-years observations, 47 firms for 2008 and 77 firms for 2009 period. Final sample is only 124 observations due to many companies did not have complete corporate governance data. Data analysis implemented was multiple tests. The results of data analysis show result of an empirical evidence that independent board of commissioner negatively affects. There is another empirical evidence that hypothesis of a negative effect of ratio of independent audit committee on firm’s earnings management is not supported

 

Author Biographies

  • Akrem Mohamed Daboba

    Student of Master Program, Department of Accounting, Faculty of Economy, Diponegoro University, Semarang, Indonesia

  • Almhdi Abulgasim A Abusbayiha

    Alecture at Faculty of Human Resources, Zulten. Sabratha University.

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Published

2025-05-13

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Section

Articles