The Determinants of Real Activity Manipulation

Abstract

This study aims to analyze the factors that influence real activity manipulation in corporations listed on the Indonesia Stock Exchange (IDX) during the 2016-2020 research period. A quantitative research method is designed in this research that collects secondary data from a company’s annual report. The sample used in this research is 25 manufacturing corporations with the number of corporations observed for 5 years as many as 125 manufacturing companies. The analytical method utilized in this research is the panel data regression method that selects one of the three best models to analyze data, and the best analytical model result is the Fixed Effect Model (FEM) approach. The results show that institutional ownership, free cash flow, and voluntary disclosure effect negatively on real activity manipulation in corporations listed on the IDX. The limitation of this research is only using the samples from manufacturing corporations so that it cannot generalize the results to all types of companies and the research period of only 5 years narrows the number of companies observed.