Construction of Earning Management Model in Indonesia

Abstract

This study aims to construct a model of earnings management consisting of: audit quality and audit committee as independent variables, professional commitment as moderating variables and earnings management as the dependent variable. The population of this study includes: first, the financial reports of manufacturing companies on the IDX in 2022 totaling 193 companies. Second, there are 193 public accountants who audit the company's financial statements. Then, the number of samples was determined by the Ferdinand formula (2018), then taken by random sampling to obtain 130 data each. Primary data in the form of audit quality and professional commitment variables were obtained by sending questionnaires to public accountants as respondents via the Google form. Secondary data in the form of the company's financial statements and the audit committee were collected by accessing idx.co.id. After the data is collected, it is then analyzed with Partial Least Square. Before being analyzed, first tested: validity, reliability, linearity, and goodness of fit. The hypothesis was tested by t-test. The results prove that the earnings management model is constructed by: first, audit quality and audit committee as independent variables capable of reducing earnings management practices. Second, professional commitment as a moderator can strengthen the negative relationship between audit quality and audit committees and earnings management.