This study aims to analyze the moderating effect of auditor characteristics on the relationship between audit committee effectiveness and earnings management. Mechanisms of good corporate governance can limit and control the opportunistic actions of management. A highly effective audit committee will reduce the prevalence of earnings management. In addition to the audit committee as an internal party that oversees the credibility of financial statements, it is also necessary to supervise external parties, through the use of external auditors. With expectations of reducing earnings manipulation, this study examines the effects of the combination of an effective audit committee and an independent auditor. The research sample selection uses a purposive judgmental non-probability sampling technique. The sample obtained is 754 firm years, consisting of three years of company observations in the Indonesian capital market between 2016 and 2018, except those in the financial sector. Earnings management is measured by accrual value using a modified Jones model. The independent variable of the study is the effectiveness of the audit committee (EFAC) which will be assessed using the DeZoort index. The results of the empirical testing support the research hypothesis; the more effective the audit committee is and the longer the external audit period is, the more prevalent earnings management will be. In addition, the more effective the audit committee is, coupled with the use of one of the big four auditors, the less prevalent earnings management will be, which means the auditor's reputation also strengthens the relationship between the effectiveness of the audit committee and earnings management. Further, the moderating effect of auditor specialization on the influence of the audit committee on earnings manipulation did not provide significant results.

This research aims to provide empirical evidence regarding the effect of auditor characteristics on the relationship between audit committee effectiveness and earnings management. Mechanisms of good corporate governance can limit and control the opportunistic actions of management. The higher level of effectiveness of the audit committee will reduce the tendency of companies to practice earnings management. In addition to the Audit Committee as an internal party that oversees the credibility of financial statements, it is also necessary to supervise external parties, namely external auditors. So that with an effective audit committee and the function of the external auditor it is expected to reduce earnings management. Agency theory is used as a theoretical framework to provide a robust theoretical framework for investigating manager behavior in various companies. In this perspective, agency theory provides a clear understanding of the effectiveness of audit committees and the characteristics of auditors, and recognizes this as the most crucial oversight mechanism that reduces agency costs, manages conflicts of interest, and mitigates earnings management. The contribution of this research to the existing literature both theoretically and empirically. Theoretically, it will add governance theory about the interaction between the audit committee and external auditors in ensuring the quality of financial reporting. Empirically, the results of research on corporate governance and reporting quality reveal that the majority of them have been conducted in countries with advanced capital markets. In contrast, studies conducted in countries with developing capital markets are still scarce. Keywords: Audit Committee, Earnings Management, Auditor, Audit Quality