The Effect of Good Corporate Governance, Firm Size, Leverage, and Firm Performance on Earnings Management: Entrenchment Management as a Moderation Variable

Abstract

This study aims to examine the effect of good corporate governance mechanisms which include the board of commissioners, board of directors, audit committee, firm size, leverage, and firm performance on earnings management with management entrenchment as a moderating variable. This type of research uses quantitative methods. The sampling technique in this study used a purposive sampling method based on predetermined criteria, obtained as many as 68 sample data from 17 sample companies in real estate and property companies listed on the Indonesia Stock Exchange (IDX) for 4 years in the 2018-2021 period. The results of this study indicate that the good corporate governance variable with the proxy of the board of directors has a negative effect on earnings management, the leverage variable has an effect on earnings management. Meanwhile, the good corporate governance variable by proxies for the board of commissioners, audit committee, firm size, and firm performance has no effect on earnings management. Management entrenchment has no effect on the interaction of leverage with earnings management, the interaction between firm performance and earnings management. Management entrenchment strengthens the influence of good corporate governance by proxies for the board of commissioners, board of directors, audit committee, and firm size on earnings management.

The Effect of Leverage, Good Corporate Governance and Company Growth on Earnings Management with Company Size as an Intervening Variable

“…Good Corporate Governance (GCG) is designed to ensure that the company is run transparently, ethically, efficiently, and in accordance with applicable laws and norms (Herdiani et al, 2021) The main objective of Good Corporate Governance (GCG) is to create long-term value for shareholders and all parties involved, including employees, customers, suppliers, and the general public. (Riyani, 2015) It is important to note that the growth of the company must be managed wisely to minimize risks and ensure long-term sustainability (Saputra & Zulfikar, 2023)The growth plan must be in accordance with the company's vision and mission, and take into account market conditions, competition, and economic changes.…”