Loan Loss Provision, Good Corporate Governance Dan Manajemen Laba Bank di Indonesia dan Malaysia

Abstract

The development of the banking sector in Indonesia and Malaysia is growing rapidly, fierce business competition encourages management's desire to improve performance and comply with banking regulations with earnings management reported by banks. The aimed of this study provides empirical evidence of the influence of Loan Loss Provision (LLP) and Good Corporate Governance (GCG) on Earnings Management in banks in Indonesia and Malaysia. The research method used is multiple linear regression analysis using a sample of six banks with the largest assets in each country during the 2015-2018 periods. The results of this study prove that (1) LLP and GCG affect earnings management at banks in Indonesia (2) LLP has no effect on earnings management at banks in Malaysia, while GCG affects earnings management at banks in Malaysia. The application of financial accounting standards IFRS 7 on financial instruments requires provision for impairment losses early so as to reduce the need for management in managing earnings; this further strengthens the need for PSAK 71 to be implemented in the banking sector in Indonesia effectively from 2020. In addition, the GCG mechanism in both countries also went well so as to be able to influence the practice of earnings management in banks

The Determinants of Bank Stability: An Empirical Investigation in Southeast Asia

“…As a result of the implementation of IFRS standards, earnings management practices decreased (Dimitropoulos et al, 2013). Banks in Malaysia tend not to adopt a Loan Loss Provision (LLP) policy for income smoothing purposes, where they assume that during good economic times customers are able to pay their financing and in bad economic times, they tend to reserve a little for LLP (N. K. Sari & Widaninggar, 2020). Additionally, the mechanism for implementing good corporate governance (GCG) in these three countries can also discourage earnings management practices (Suripto, 2022).…”

Prevention Of Earnings Management Behavior In The Banking Industry Through Government Regulations

“…Positive accounting theory is designed to explain and predict which methods companies will use in their accounting practices (Watts and Zimmerman, 1986). Scott (2009) adds that TAP is used to explain the reasons for an accounting practice used by a company.…”

“…In the banking industry the rules regarding reserves for impairment losses or Loan Loss Provisions (LLP) is very important in strengthening the financial position of the bank. LLP assists bank managers in dealing with future declines in credit quality (Sari and Widaninggar, 2021). In several research results (Abaoub and Gamra, 2013;Di Martino et al, 2017;Sari and Widaninggar, 2020) it was found that LLP is used by bank managers in managing earnings in various countries, because the determination of LLP uses direct judgment by bank managers which is dominated by higher in subjectivity.…”

Financial Distress terhadap Manajemen Laba Dengan Mekanisme Corporate Governance sebagai Pemoderasi

“…Manajemen dapat menentukan basis manajemen laba untuk memenuhi kepentingannya. Menurut Octavia (2017), manajemen laba dapat dilakukan melalui manipulasi akrual dan manipulasi dari aktivitas riil (Putra, 2014;Rukmana, 2018;Asim & Ismail, 2019;Widya & Nugrahani, 2018;Septriyani & Handayani, 2018;Sari & Widaninggar, 2020;Dewi & Anisykurlillah, 2021;dan Hasanuddin et al, 2021).…”