Agency theory and the financial crisis from a strategic perspective

Smith, Alan D.

doi:10.1504/ijbis.2010.031929

Cited by 8 publications

(4 citation statements)

References 21 publications

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“…Agents are given the task of managing the company to improve the welfare of the principal. Managers prioritize their own best interests to bring up the concept of moral hazard (Smith, 2010). When the company experiences financial pressure, the company overcomes it by manipulating earnings, so that the company's financial performance remains good and in turn, agents will still get rewards according to the contract.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Distress, Audit Quality, and Earnings Management–Indonesia's Mining Sector Evidence

Wiratno¹,

Krismiaji²,

Handayani³

et al. 2023

JMP

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This paper describes research that investigated the association between financial distress (Dist) and accrual earnings management (AEM), and the role played by audit quality (AQ) in that association. Financial distress is measured by The Modified Altman Z-Score for emerging markets (EMZ score), earnings management is measured by discretionary accrual, and audit quality is measured by audit-firm size (Big4). Data analysis was performed with Pooled Least Square. Using data from Indonesian Mining Sector for 2016–2020, the research finds empirical evidence that financial distress firms involve in income-increasing accrual earning management, but such involvement is lower when firms are audited by Big 4 audit firms. This research contributes to previous literature about similar issues, specifically about the impact of financial distress on accrual earnings management. It also presents evidence about the role of audit quality in such an effect.

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Section: Literature Reviewmentioning

confidence: 99%

Financial Distress, Audit Quality, and Earnings Management–Indonesia's Mining Sector Evidence

Wiratno¹,

Krismiaji²,

Handayani³

et al. 2023

JMP

View full text Add to dashboard Cite

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“…According to De Vany (1984), the main causes of bank bankruptcy are the information asymmetry, agency problem and moral hazard that occur together. Smith (2010) found evidence that there is a correlation between agency problems and bank bankruptcy in the crisis period of 2007 and 2008. The agency problem is the problem of mismatch of interests between shareholders as principals and management as agents (Jensen and Meckling 1976;Rose 1992).…”

Section: Literature Reviewmentioning

confidence: 99%

Early Warning Early Action for the Banking Solvency Risk in the COVID-19 Pandemic Era: A Case Study of Indonesia

et al. 2021

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The COVID-19 pandemic has affected people’s lives and increased the banking solvency risk. This research aimed to build an early warning and early action simulation model to mitigate the solvency risk using the system dynamics methodology and the Powersim Studio 10© software. The addition of an early action simulation updates the existing early warning model. Through this model, the effect of policy design and options on potential solvency risks is known before implementation. The trials conducted at Bank BRI (BBRI) and Bank Mandiri (BMRI) showed that the model had the ability to provide an early warning of the potential increase in bank solvency risk when the loan restructuring policy is revoked. It also simulates the effectiveness of management’s policy options to mitigate these risks. This research used publicly accessible banking data and analysis. Bank management could also take advantage of this model through a self-stimulation facility developed in this study to accommodate their needs using the internal data.

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“…Financial distress akan mencerminkan kinerja manajemen yang buruk. Kondisi ini menyebabkan manajer cenderung membuat keputusan yang aman untuk mempertahankan posisinya (Smith, 2010). Penerapan konservatisme akuntansi akan meningkatkan integritas laporan keuangan, tetapi jika konservatisme akuntansi dikurangi maka integritas laporan keuangan akan menurun.…”

Section: Financial Distress Dan Integritas Laporan Keuanganunclassified

The Impact Of Financial Distress, Audit Committee, And Firm Size On The Integrity Of Financial Statements

Halim¹

2021

jak

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This study aims to examine the impact of Financial Distress, Audit Committee, and Firm Size on The Integrity of Financial Statements. The integrity of financial statements can reflect the company's financial performance. The research sample obtained were based on purposive sampling technique, is including 32 consumer goods industry sectors firms listed in Indonesian Stock Exchange over the period of 2013-2017. Sources of research data are annual reports. Data analysis used descriptive statistics, classic assumption tests, estimation models, and panel data regression analysis. The panel data regressions analysis was the methodology employed for verifying the factors that may influence the integrity of financial statements. Based on the results of the Chow test and the Hausman test, the appropriate panel data regression model to be used for this study is the fixed effects model. This study provides empirical evidence that financial distress is negatively associated with the the integrity of financial statements, while audit committee and company size have positive effect on the the integrity of financial statements. Keywords: Financial Distress, Audit Committee, Firm Size, Integrity of Financial Statements.

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Agency theory and the financial crisis from a strategic perspective

Cited by 8 publications

References 21 publications

Financial Distress, Audit Quality, and Earnings Management–Indonesia's Mining Sector Evidence

Financial Distress, Audit Quality, and Earnings Management–Indonesia's Mining Sector Evidence

Early Warning Early Action for the Banking Solvency Risk in the COVID-19 Pandemic Era: A Case Study of Indonesia

The Impact Of Financial Distress, Audit Committee, And Firm Size On The Integrity Of Financial Statements

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