Corporate Governance Moderates the Relationship of Information Asymmetry and Dividend Policy Towards Earnings Management

Authors

  • Novita Eka Berlianti Universitas Pembangunan Nasional Veteran Jakarta
  • Husnah Nur Laela Ermaya Universitas Pembangunan Nasional Veteran Jakarta
  • Yoyoh Guritno Universitas Pembangunan Nasional Veteran Jakarta

DOI:

https://doi.org/10.34209/equ.v25i1.3262

Keywords:

Earnings Management, Information Asymmetry, Dividend Policy, Corporate Governance

Abstract

In determining accounting profit, managers need to use certain assumptions and estimates in accordance with applicable accounting standards. This can lead to different treatment between transactions with one another and increase the potential of the management to implement earnings management in order to fulfill their personal interests. The difference in information related to the condition of the company and the interests between managers and shareholders is allegedly a factor that determines the occurrence of earnings management. Thus, this study was conducted to examine the effect of information asymmetry and dividend policy on earnings management, and how the role of corporate governance in moderating the relationship between information asymmetry and dividend policy on earnings management. The sample in this study were 46 banking companies listed on the Indonesia Stock Exchange for the 2015-2019 period and were selected using the purposive sampling method. The final sample used in this study were 9 banking companies. The test results using Fixed Effect Generalized Least Square (FEGLS) regression showed that: (1) Information asymmetry had no significant effect on earnings management; (2) Dividend policy has a significant negative effect on earnings management; (3) Corporate governance cannot moderate the relationship between information asymmetry and earnings management; (4) Corporate governance cannot moderate the relationship between dividend policy and earnings management.

References

Ab-Hamid, M. F., Asid, R., Sulaiman, N. F. C., Sulaiman, W. F. W., & Bahri, E. N. A. (2018). The Effect of Earnings Management on Bank Efficiency. Asian Journal of Accounting and Governance, 10, 1–12. https://doi.org/10.17576/AJAG-2018-10-07

Abad, D., Cutillas-Gomariz, M. F., Sánchez-Ballesta, J. P., & Yagüe, J. (2018). Real Earnings Management and Information Asymmetry in the Equity Market. European Accounting Review, 27(2), 209–235. https://doi.org/10.1080/09638180.2016.1261720

Abdelkarim, N., & Zuriqi, K. (2020). Corporate governance and earnings management: Evidence from listed firms at Palestine exchange. Asian Economic and Financial Review, 10(2), 200–217. https://doi.org/10.18488/journal.aefr.2020.102.200.217

Agustia, D., Muhammad, N. P. A., & Permatasari, Y. (2020). Earnings management, business strategy, and bankruptcy risk: evidence from Indonesia. Heliyon, 6(2), 1–9. https://doi.org/10.1016/j.heliyon.2020.e03317

Alexander, N., & Hengky. (2017). Factors Affecting Earnings Management in the Indonesian Stock Exchange. Journal of Finance and Banking Review, 2(2), 8–14.

Azevedo, Y., Tortoli, J., Stanzani, L., & Gaio, L. (2019). Dividend Payment and Earnings Management Practices in Brazilian Public Firms. XIII Congresso Anpconi.

Beaver, W. H., & Engel, E. E. (1996). Discretionary behavior with respect to allowances for loan losses and the behavior of security prices. Journal of Accounting and Economics, 22(1–3), 177–206. https://doi.org/10.1016/S0165-4101(96)00428-4

Booth, L., & Zhou, J. (2017). Dividend policy: A selective review of results from around the world. Global Finance Journal, 34, 1–15. https://doi.org/10.1016/j.gfj.2017.07.002

Cahyono, B., & Widyawati, D. (2019). Pengaruh Asimetri Informasi, Ukuran Perusahaan, dan Profitabilitas Terhadap Manajemen Laba. Jurnal Ilmu Dan Riset Akuntansi (JIRA), 8(2), 1–16.

Dahayani, N., Budiartha, I., & Suardhika, I. (2017). Pengaruh Kebijakan Dividen pada Manajemen Laba dengan Good Corporate Governance Sebagai Moderasi. E-Jurnal Ekonomi Dan Bisnis Universitas Udayana, 6(4), 1395–1424.

Elbadry, A., Gounopoulos, D., & Skinner, F. (2015). Governance quality and information asymmetry. Financial Markets, Institutions and Instruments, 24(2–3), 127–157. https://doi.org/10.1111/fmii.12026

Ermaya, H. N. L., & Astuti, M. (2017). Asimetri Informasi Dan Manajemen Laba Dengan Mekanisme Corporate Governance Sebagai Pemoderasi (Studi Pada Bank Go Publik Yang Terdaftar Di Bursa Efek Indonesia). Jurnal MEBIS: Manajemen Dan Bisnis, 2(2), 12–23. https://doi.org/10.33005/mebis.v2i2.9

Evodila, Erlina, & Kholis, A. (2020). The Effect of Information Asymmetry, Financial Performance, Financial Leverage, Managerial Ownership on Earnings Management with the Audit Committee as Moderation Variables. Jurnal Mantik, 4(3), 1734–1745. https://doi.org/10.35335/mantik.Vol4.2020.987.pp1734-1745

Fadillah, D., & Afriyenti, M. (2020). Pengaruh Corporate Governance, Kualitas Laba, Ukuran Perusahaan Terhadap Asimetri Informasi. Jurnal Eksplorasi Akuntansi, 2(1), 2115–2128. https://doi.org/10.24036/jea.v2i1.202

Ghani, E. K., Azemi, N. A. M., & Puspitasari, E. (2017). The Effect of Information Asymmetry and Environmental Uncertainty on Earnings Management Practices among Malaysian Technology-Based Firms. International Journal of Academic Research in Economics and Management Sciences, 6(1), 178–194. https://doi.org/10.6007/ijarems/v6-i1/2617

Godfrey, J., Hodgson, A., Tarca, A., Hamilton, J., & Holmes, S. (2010). Accounting Theory (7th ed.). John Wiley & Sons Australia Ltd.

Governance, K. N. K. (2006). Pedoman Umum Good Corporate Governance Indonesia. KNKG. http://marefateadyan.nashriyat.ir/node/150

Gunawan, K. E., R. Murhadi, W., & Herlambang, A. (2019). The effect of good corporate governance on dividend policy. Advances in Social Science, Education and Humanities Research, 308(Insyma), 57–61. https://doi.org/10.2991/insyma-19.2019.15

Harahap, H. P. (2018). The Influence of Information Asymmetry on Earnings Management With Good Corporate Governance (GCG) as the Moderating variable. The Indonesian Accounting Review, 7(1), 61–68. https://doi.org/10.14414/tiar.v7i1.685

He, W., Ng, L., Zaiats, N., & Zhang, B. (2017). Dividend Policy and Earnings Management Across Countries. Journal of Corporate Finance, 42, 267–286. https://doi.org/10.1016/j.jcorpfin.2016.11.014

Iacobucci, D., Schneider, M. J., Popovich, D. L., & Bakamitsos, G. A. (2016). Mean centering helps alleviate “micro” but not “macro” multicollinearity. Behavior Research Methods, 48(4), 1308–1317. https://doi.org/10.3758/s13428-015-0624-x

Im, C. C., Kim, J. H., & Choi, M. K. (2016). Dividend Policy and Earnings Management: Based on Discretionary Accruals and Real Earnings Management. International Journal of U- and e- Service, Science and Technology, 9(2), 137–150. https://doi.org/10.14257/ijunesst.2016.9.2.15

Jensen, M., & Meckling, W. (1976). Theory of Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3, 305–360.

Jeradu, E. F. (2021). Pengaruh Ukuran Perusahaan, Kebijakan Dividen, Dan Perencanaan Pajak Terhadap Manajemen Laba. Akmenika: Jurnal Akuntansi Dan Manajemen, 18(1), 520–526. https://doi.org/10.31316/akmenika.v18i1.1494

Khanh, M. T. H., & Thu, A. P. (2019). The effect of financial leverage on real and accrual-based earnings management in vietnamese firms. Economics and Sociology, 12(4), 299–312. https://doi.org/10.14254/2071-789X.2019/12-4/18

Kurniyawati, I. (2019). Pengaruh Konservatisme Akuntansi Dan Good Corporate Governance Terhadap Asimetri Informasi. Jurnal Penelitian Ekonomi Dan Akuntansi, 4(1), 979–1006. https://doi.org/10.30736/jpensi.v4i1.221

Leventis, S., & Dimitropoulos, P. (2012). The role of corporate governance in earnings management: Experience from US banks. Journal of Applied Accounting Research, 13(2), 161–177. https://doi.org/10.1108/09675421211254858

Nguyen, T. T. N., & Bui, P. K. (2019). Dividend policy and earnings quality in Vietnam. Journal of Asian Business and Economic Studies, 26(2), 301–312. https://doi.org/10.1108/jabes-07-2018-0047

Otoritas Jasa Keuangan. (2017). Surat Edaran Otoritas Jasa Keuangan No 13/SEOJK.03/2017 tentang Penerapan Tata Kelola Bagi Bank Umum. Otoritas Jasa Keuangan.

Pratiwi, A., Nurkholis, & Ghofar, A. (2015). Pengaruh Corporate Governance dan Struktur Kepemilikan Terhadap Asimetri Informasi. Jurnal Akuntansi Dan Auditing Indonesia, 19(2), 99–111. https://doi.org/10.20885/jaai.vol19.iss2.art2

Putri, Y., & Sujana, I. (2018). The Influence of Bid-Ask Spread and Leverage on Earnings Management with Good Corporate Governance as Moderating Variable. International Research Journal of Management, IT & Social Sciences, 5(3), 8–21.

Rahmawati, A., & Fajri, R. (2021). Firm Size , Leverage , Dividend Policy , Ownership Structure , Earning Management : Evidence in Indonesia Stock Exchange Firm Size to Earnings Management. Proceedings of the 4th International Conference on Sustainable Innovation 2020-Accounting and Management.

Salehi, H., Rezaie, H., & Ansari, F. (2014). Corporate governance and information asymmetry. Management Science Letters, 4, 1829–1836. https://doi.org/10.5267/j.msl.2014.6.048

Sari, N. P., & Khafid, M. (2020). Peran Kepemilikan Manajerial dalam Memoderasi Pengaruh Profitabilitas , Leverage , Ukuran Perusahaan , Kebijakan Dividen Terhadap Manajemen Laba pada Perusahaan BUMN. Moneter: Jurnal Akuntansi Dan Keuangan, 7(2), 222–231.

Scott, W. (2015). Financial Accounting Theory. In Financial Accounting (7th ed.). Pearson. https://doi.org/10.4324/9780203784655

Shahwan, Y., & Almubaydeen, T. H. (2020). Effects of Board Size , Board Composition and Dividend Policy on Real Earnings Management in the Jordanian Listed Industrial Firms. International Journal of Financial Research, 11(4), 195–202. https://doi.org/10.5430/ijfr.v11n4p195

Silalahi, S., & Silalahi, M. (2020). Analisis Pengaruh Kecenderungan Manajemen Laba : Studi Empiris Pada Perusahaan Logistic. Jurnal Manajemen Bisnis Transportasi Dan Logistik, 6(1), 1–16.

Sofia, I., & Murwaningsari, E. (2019). The Role of Corporate Diversification, Capital Structure Determinant, And Structure of Ownership on Earning Management with Information Asymmetry as Moderating Variable. Research Journal of Finance and Accounting, 10(14), 45–51. https://doi.org/10.7176/RJFA

Solikhah, B., & Maulina, U. (2021). Factors influencing environment disclosure quality and the moderating role of corporate governance quality and the moderating role of corporate governance. Cogent Business & Management, 8(1), 1–18. https://doi.org/10.1080/23311975.2021.1876543

Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010

Subramanyam, K. R. (2014). Financial Statement Analysis (11th ed.). McGraw-Hill Education.

Sumantri, F. A., Kusnawan, A., & Anggraeni, R. (2021). The Effect Of Information Asymmetry , Company Size And Managerial Ownership On Income Management (Empirical Study on Manufacturing Companies Listed on the Indonesia Stock Exchange). PRIMANOMICS : Jurnal Ekonomi Dan Bisnis, 19(1), 62–76. https://doi.org/10.31253/pe.v19i1.505

Tran, D. V., & Ashraf, B. N. (2018). Dividend policy and bank opacity. International Journal of Finance & Economics, 23(2), 186–204. https://doi.org/10.1002/ijfe.1611

Utomo, L. P. (2020). Good Corporate Governance Moderation of Influences Between Information Asymmetry Against Earnings Management. Bilancia: Jurnal Ilmiah Akuntansi, 4(2), 183–190.

Wahidahwati. (2012). The Influence of Financial Policies on Earnings Management, Moderated by Good Corporate Governance. Ekuitas: Jurnal Ekonomi Dan Keuangan, 16(4), 507–521. https://doi.org/10.24034/j25485024.y2012.v16.i4.125

Wartaekonomi.co.id. (2020). Gerindra: Window Dressing BTN Cara Bobol Bank Tingkat Tinggi, Mirip-mirip Jiwasraya-Asabri. https://www.wartaekonomi.co.id/read270400/gerindra-window-dressing-btn-cara-bobol-bank-tingkat-tinggi-mirip-mirip-jiwasraya-asabri/0

Watts, R., & Zimmerman, J. (1990). Positive Accounting Theory : A Ten Year Perspective. The Accounting Review, 65(1), 131–156.

Wiyadi, Veno, A., & Sasongko, N. (2015). Information Asymmetry and Earning Management : Good Corporate. South East Asia Journal of Contemporary Business Economic and Law, 7(2), 54–61.

Wooldridge, J. M. (2002). Econometric Analysis of Cross Section and Panel Data. The MIT Press Cambridge.

Yang, C., Tan, B. L., & Ding, X. (2012). Corporate governance and income smoothing in China. Journal of Financial Reporting and Accounting, 10(2), 120–139. https://doi.org/10.1108/19852511211273688

Yimenu, K. A., & Surur, S. A. (2019). Earning Management : From Agency and Signalling Theory Perspective in Ethiopia. Journal of Economics, Management and Trade, 24(6), 1–12. https://doi.org/10.9734/JEMT/2019/v24i630181

Yisha, M. (2020). Analysis on Efficiency and Opportunistic Perspective under the Pat. The Frontiers of Society, Science and Technology, 2(17), 71–79. https://doi.org/10.25236/FSST.2020.021712

Downloads

Published

2022-06-30

Issue

Vol. 25 No. 1 (2022): EQUITY

Section

Articles

License

Syarat yang harus dipenuhi oleh Penulis sebagai berikut:

  • Penulis menyimpan hak cipta dan memberikan jurnal hak penerbitan pertama naskah secara simultan dengan lisensi di bawah Creative Commons Attribution License yang mengizinkan orang lain untuk berbagi pekerjaan dengan sebuah pernyataan kepenulisan pekerjaan dan penerbitan awal di jurnal ini.

  • Penulis bisa memasukkan ke dalam penyusunan kontraktual tambahan terpisah untuk distribusi non ekslusif versi kaya terbitan jurnal (contoh: mempostingnya ke repositori institusional atau menerbitkannya dalam sebuah buku), dengan pengakuan penerbitan awalnya di jurnal ini.

  • Penulis diizinkan dan didorong untuk memposting karya mereka online (contoh: di repositori institusional atau di website mereka) sebelum dan selama proses penyerahan, karena dapat mengarahkan ke pertukaran produktif, seperti halnya sitiran yang lebih awal dan lebih hebat dari karya yang diterbitkan. (Lihat Efek Akses Terbuka).