Pengaruh Koneksi Politik terhadap Tingkat Real Earnings Management di Indonesia
Keywords:
Politically Connected Board of Commisioner, Politically Connected Board of Director, Political Connections, Real Earnings Managament
Abstract
The Objective of this research was to prove that there is a correlation between political connections with real earnings management. Some of the previous research had shown the result that political connections positively effected earnings management level, but some others found different results. Political connections in this research were measured by the sum of politically connected board of director and politically connected board of commissioner. This research was conducted in Indonesia using publicly listed manufacture companies. A total sample in this research is 297 firm years. The results of this research are not supported the hypothesis which was previously developed. This research showed that both politically connected board of director and politically connected board of commissioner are not affected the real earnings management practices. It can be resulted from the insignificant number of politically connected board of director and politically connected board of commissioner in the sampel. So that the political connection could not be the predictor of real earnings management in this research.
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References
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Ajina, Aymen et al, 2013. Corporate Governance Mechanisms and Earnings Management After and Before the Adopstion of IFRS. The Business and Management Review 3(4), pp 147-162.
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Bradbury, M., Mak, Y. T., & Tan, S. M. (2006). Board characteristics, audit committee characteristics and abnormal accruals. Pacific accounting review, 18(2), 47-68
Carcello, Joseph V et al, 2008. Audit Committee Financial Expertise, Competing Corporate Governance Mechanisms, and Earnings Management in a Post-SOX World. Working Paper.
Chalevas, Constantinos, Christos Tzovas, 2010. The Effect of the Mandatory Adoption of Corporate Governance Mechanisms on Earnings Manipulatio, Management Effectiveness, and Firm Financing: Evidence from Greece. Managerial Finance 36(3), pp 257-277.
Chaney, P. K., Faccio, M., & Parsley, D. (2011). The quality of accounting information in politically connected firms. Journal of accounting and Economics, 51(1-2), 58-76.
Chi, J., Liao, J., & Chen, X. (2016). Politically connected CEOs and earnings management: Evidence from China. Journal of the Asia Pacific Economy, 21(3), 397-417
Cohen, Daniel A et al, 2008. Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes-Oxley Periods. The Accounting Review3(83), pp 757-787.
Darmayanti, Y., Rifa, D., & Khairia, I. (2021). Pengaruh corporate governance terhadap hubungan keterlibatan dewan di bidang politik dan manajemen laba. Jurnal Akademi Akuntansi, 4(2), 138-151.
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Harymawan, I., Nasih, M., Madyan, M., & Sucahyati, D. (2019). The role of political connections on family firms’ performance: Evidence from Indonesia. International Journal of Financial Studies, 7(4), 55.
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Lai, Liona, Henry Tam, 2007. Independent Directors and the Prospensity to Smooth Earnings: A Study of Corporate Governance in China. The Business Review 7(1), pp328-335.
Lin, Teng et al, 2013. Earnings Management and the Role of the Audit Committee: An Investigation of the Influence of Cross-listing and Government Officias on the Audit Committee. Journal of Management and Governance, 2013.
Man, Chi-Keung; Brossa Wang, 2013. Corporate Governance and Earnings Management: A Survey. Journal of Applied Business Research 29(2), pp 391-418.
Modugu, K.P., E.L. Dabor, 2013. Discourses on Corporate Governance and Earnings Management: A Theoritical Approach. Journal of Accounting and Finance 3(1), pp 31-33.
Nelson, M. W., Elliott, J. A., & Tarpley, R. L. (2002). Evidence from auditors about managers' and auditors' earnings management decisions. The accounting review, 77(s-1), 175-202.
Rahmaningtyas, D. H., Permana, D., & Setianingtyas, A. K. W. Political Connection And Earnings Management: Evidence From Indonesia.
Roychowdury, Sugata, 2006. Earnings Management Through Real Activities Manipulation. Journal of Accounting and Economics 42, pp 335-370.
Tangjitprom, Nopphon, 2013. The Role of Corporate Governance in Reducing the Negative Effect of Earnings Management. International Journal of Economics and Finance 5(3), pp 213-220.
Sadiq, M., Othman, Z., & Keong, O. C. (2019). A study of interaction effects of political influences and earnings management on organisational performance. Asian Economic and Financial Review, 9(5), 642-653.
Savitri, E. (2021). Political Connection, Family Ownership, and Earnings Management in Manufacturing Companies in Indonesia. Jurnal Aplikasi Manajemen, 19(3).
Scott, W.R. (2009). Financial Accounting Theory, 5th Edition. Toronto: Pearson Prentice Hall
Supatmi, S., & Handayani, L. (2022). Koneksi Politik Dan Praktik Manajemen Laba Riil: Studi Pada Industri Keuangan Di Indonesia. Jurnal Akademi Akuntansi, 5(1), 121-134
Vlaminck, Nicolas D, Gerrit Sarens, 2013. The Relationship Between Audit Committee Characteristics and Financial Statement Quality: Evidence from Belgium. Journal of Management and Governance, 2013
Wahab, E. A. A., Jamaludin, M. F., Agustia, D., & Harymawan, I. (2020). Director Networks, Political Connections, and Earnings Quality in Malaysia. Management and Organization Review, 16, 687-724.
Braam, G., Nandy, M., Weitzel, U., & Lodh, S. (2015). Accrual-based and real earnings management and political connections. The International Journal of Accounting, 50(2), 111-141.
Sadiq, M., Mohamad, S., & Kwong, W. C. G. (2019). Do CEO Incentives mediate the relationship between political influences and financial reporting quality?. International Journal of Asian Social Science, 9(3), 276-284.
Maaloul, A., Chakroun, R., & Yahyaoui, S. (2018). The effect of political connections on companies’ performance and value: Evidence from Tunisian companies after the revolution. Journal of Accounting in Emerging Economies
Preuss, S., & Königsgruber, R. (2021). How do corporate political connections influence financial reporting? A synthesis of the literature. Journal of Accounting and Public Policy, 40(1), 106802.
Ajina, Aymen et al, 2013. Corporate Governance Mechanisms and Earnings Management After and Before the Adopstion of IFRS. The Business and Management Review 3(4), pp 147-162.
Antle, R., & Nalebuff, B. (1991). Conservatism and auditor-client negotiations. Journal of Accounting Research, 31-54.
Baysinger, Barry, Robert E.Hoskisson, 1990. The Composition of Boards of Directors and Strategic Control: Effects on Corporate Strategy. Academy of Management Reviewer, 15(1), pp 72-87.
Beasley, Mark S, 1996. An Empirical Analysis of the Relation Between the Board of Director Composition and Financial Statement Fraud. The Accounting Review 71(4), pp 443-465.
Becker, Connie L, 1998. The Effect of Audit Quality on Earnings Management. Contemporary Accounting Research 1(15), pp 1-24.
Bedard, Jean et al, 2004. The Effect of Audit Committee Expertise, Independence, and Activity on Aggressive Earnings Management. Auditing: A Journal of Practice and Theory 23(2), pp 13-35.
Bodolato, Patrick et al, 2013. Audit Committee Financial Expertise and Earning Management: The Role of Status. Working paper.
Bradbury, M., Mak, Y. T., & Tan, S. M. (2006). Board characteristics, audit committee characteristics and abnormal accruals. Pacific accounting review, 18(2), 47-68
Carcello, Joseph V et al, 2008. Audit Committee Financial Expertise, Competing Corporate Governance Mechanisms, and Earnings Management in a Post-SOX World. Working Paper.
Chalevas, Constantinos, Christos Tzovas, 2010. The Effect of the Mandatory Adoption of Corporate Governance Mechanisms on Earnings Manipulatio, Management Effectiveness, and Firm Financing: Evidence from Greece. Managerial Finance 36(3), pp 257-277.
Chaney, P. K., Faccio, M., & Parsley, D. (2011). The quality of accounting information in politically connected firms. Journal of accounting and Economics, 51(1-2), 58-76.
Chi, J., Liao, J., & Chen, X. (2016). Politically connected CEOs and earnings management: Evidence from China. Journal of the Asia Pacific Economy, 21(3), 397-417
Cohen, Daniel A et al, 2008. Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes-Oxley Periods. The Accounting Review3(83), pp 757-787.
Darmayanti, Y., Rifa, D., & Khairia, I. (2021). Pengaruh corporate governance terhadap hubungan keterlibatan dewan di bidang politik dan manajemen laba. Jurnal Akademi Akuntansi, 4(2), 138-151.
Dechow, P.M. et al, 1995. Detecting Earnings Management. The Accounting Review 70(2), pp. 193-225.
Dechow, P.M. et al, 2012. Detecting Earnings Management: A New Approach. Journal of Accounting Research 50(2), pp 275-334.
Defond, Mark L et al, 2005. Does the Market Value Financial Expertise on Audit Committee of Boards of Directors?. Journal of Accounting Research 43(2), pp 153-193.
Ding, R., Li, J., & Wu, Z. (2018). Government affiliation, real earnings management, and firm performance: The case of privately held firms. Journal of business research, 83, 138-150.
Faccio, M. (2006). Politically connected firms. American economic review, 96(1), 369-386.
Fama, Eugene F, Jensen Michael C, 1983. Separation of Ownership and Control. Journal of Law and Economics.
Gulzar, M. Awais, 2011. Corporate Governance Characteristics and Earnings Management: Empirical evidence from Chinese Listed Firms. International Joural of Accounting and Financial Reporting 1(1), pp 133-151.
Hunton, James E et al, 2006. Financial Reporting Transparency and Earnings Management. The Accounting Review 1(81), pp 135-157.
Hashemi, S.A., Hamed Rabiee, 2011. The Role of Corporate Governance in Real Earnings Management: Evidence from Iran. Interdisciplinary Journal of Contemporary Research in Business 3(6), pp 848-857.
Harymawan, I., Nasih, M., Madyan, M., & Sucahyati, D. (2019). The role of political connections on family firms’ performance: Evidence from Indonesia. International Journal of Financial Studies, 7(4), 55.
Healy, P.M., Wahlen J.M., 1999. A Review of the Earnings Management Literature and Its Implication for Standard Setting. Accounting Horizon 13, pp 365-383.
Jacoby, G., Li, J., & Liu, M. (2019). Financial distress, political affiliation and earnings management: the case of politically affiliated private firms. The European Journal of Finance, 25(6), 508-523.
Jensen, Michael C, William H. Meckling, 1976. Theory of The Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial Economics, pp 305-360.
JIA, W. H., FU, G., & LI, Z. Y. Executive Payment, Political Connection and Earnings Management—An Empirical Research Based on the A-share Public Board Listed Companies in China.
Kinney Jr, W. R., & Martin, R. D. (1994). Does auditing reduce bias in financial reporting? A review of audit-related adjustment studies. Auditing, 13(1), 149
Krishnan, Jayanthi, 2005. Audit Committee Quality and Internal Control: An Empirical Analysis. The Accounting Review 80(2), pp 649-675.
Lai, Liona, Henry Tam, 2007. Independent Directors and the Prospensity to Smooth Earnings: A Study of Corporate Governance in China. The Business Review 7(1), pp328-335.
Lin, Teng et al, 2013. Earnings Management and the Role of the Audit Committee: An Investigation of the Influence of Cross-listing and Government Officias on the Audit Committee. Journal of Management and Governance, 2013.
Man, Chi-Keung; Brossa Wang, 2013. Corporate Governance and Earnings Management: A Survey. Journal of Applied Business Research 29(2), pp 391-418.
Modugu, K.P., E.L. Dabor, 2013. Discourses on Corporate Governance and Earnings Management: A Theoritical Approach. Journal of Accounting and Finance 3(1), pp 31-33.
Nelson, M. W., Elliott, J. A., & Tarpley, R. L. (2002). Evidence from auditors about managers' and auditors' earnings management decisions. The accounting review, 77(s-1), 175-202.
Rahmaningtyas, D. H., Permana, D., & Setianingtyas, A. K. W. Political Connection And Earnings Management: Evidence From Indonesia.
Roychowdury, Sugata, 2006. Earnings Management Through Real Activities Manipulation. Journal of Accounting and Economics 42, pp 335-370.
Tangjitprom, Nopphon, 2013. The Role of Corporate Governance in Reducing the Negative Effect of Earnings Management. International Journal of Economics and Finance 5(3), pp 213-220.
Sadiq, M., Othman, Z., & Keong, O. C. (2019). A study of interaction effects of political influences and earnings management on organisational performance. Asian Economic and Financial Review, 9(5), 642-653.
Savitri, E. (2021). Political Connection, Family Ownership, and Earnings Management in Manufacturing Companies in Indonesia. Jurnal Aplikasi Manajemen, 19(3).
Scott, W.R. (2009). Financial Accounting Theory, 5th Edition. Toronto: Pearson Prentice Hall
Supatmi, S., & Handayani, L. (2022). Koneksi Politik Dan Praktik Manajemen Laba Riil: Studi Pada Industri Keuangan Di Indonesia. Jurnal Akademi Akuntansi, 5(1), 121-134
Vlaminck, Nicolas D, Gerrit Sarens, 2013. The Relationship Between Audit Committee Characteristics and Financial Statement Quality: Evidence from Belgium. Journal of Management and Governance, 2013
Wahab, E. A. A., Jamaludin, M. F., Agustia, D., & Harymawan, I. (2020). Director Networks, Political Connections, and Earnings Quality in Malaysia. Management and Organization Review, 16, 687-724.
Braam, G., Nandy, M., Weitzel, U., & Lodh, S. (2015). Accrual-based and real earnings management and political connections. The International Journal of Accounting, 50(2), 111-141.
Sadiq, M., Mohamad, S., & Kwong, W. C. G. (2019). Do CEO Incentives mediate the relationship between political influences and financial reporting quality?. International Journal of Asian Social Science, 9(3), 276-284.
Maaloul, A., Chakroun, R., & Yahyaoui, S. (2018). The effect of political connections on companies’ performance and value: Evidence from Tunisian companies after the revolution. Journal of Accounting in Emerging Economies
Preuss, S., & Königsgruber, R. (2021). How do corporate political connections influence financial reporting? A synthesis of the literature. Journal of Accounting and Public Policy, 40(1), 106802.
Published
2023-02-28
How to Cite
Kesaulya, F., Putri, W., & Khairunnisa, K. (2023). Pengaruh Koneksi Politik terhadap Tingkat Real Earnings Management di Indonesia. Perspektif Akuntansi, 6(1), 1-14. https://doi.org/10.24246/persi.v6i1.p1-14
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Perspektif Akuntansi is licensed under a Creative Commons Attribution 4.0 International (CC BY 4.0) License
