Earnings Management and Fraudulent Financial Reporting
Journal Title: GATR Accounting and Finance Review - Year 2019, Vol 4, Issue 2
Abstract
Objective - The objective of this research is to obtain empirical evidence about the effect of real earnings management that is proxied by abnormal Cash Flow from operating and discretionary expenses towards fraudulent financial reporting. Methodology/Technique - The objects in this research are companies listed on the Indonesian Stock Exchange (idx) between 2011 and 2015 comprised of companies that have engaged in fraudulent activities as well as those that have not, to enable a comparison to be made. The companies that have engaged in fraudulent financial reporting were obtained from a list issued by the Financial Services Authority (OJK), being the agency that oversees the capital market in Indonesia. The sampling is conducted using purposive sampling. Secondary data is used, and the hypotheses are testing using logistic regression analysis. Finding - The results of this research show that: (1) Real Earning Management proxied by Abnormal Cash Flow from operating activities (CFO) have a significant effect towards Fraudulent Financial Reporting (FFR), (2) Real Earning Management proxied by Abnormal Discretionary Expenses does not have an effect on Fraudulent Financial Reporting (FFR) and (3) Real Earning Management that is proxied by Abnormal Cash Flow from operating (CFO) and Abnormal Discretionary Expenses have a simultaneous and significant effect on Fraudulent Financial Reporting (FFR). Novelty - Based on these findings, this research provides insight to companies to enable them to give greater attention to abnormal cash flow from operating activities due to the effect this has on companies that are suspected of committing irregularities in its operational activities. This is important because fraudulent reporting can erode investor's confidence and thereby reduce investment in the company.
Authors and Affiliations
Rosita Suryaningsih, Febryanti Simon
Keywords
Related Articles
- EP ID EP618199
- DOI 10.35609/afr.2019.4.2(3)
- Views 102
- Downloads 0
Impact of Tri Hita Karana Culture on the Use of Accounting Information Systems and User Satisfaction as the Expression of Information System Success
Objective – The research aims to examine whether Tri Hita Karana (THK) culture influences the use of Acccounting Information System (AIS) and user satisfaction as the expression of Information Systems (IS) success. Metho...
State Ownership, Family Ownership, and Sustainability Report Quality: The Moderating Role of Board Effectiveness
Objective - This research analyzes the effect of state ownership, family ownership, and the effectiveness of the board's moderating role on sustainability report quality of Indonesian companies. Methodology/Technique -...
E-Government as an Anti-Corruption Tool: Experience from Indonesia
Objective – Transparency is promoted as one of the most important measures against corruption. E-government provides greater access to information that can subsequently increase transparency, accountability, and be used...
Ownership Structure and Earnings Management
Objective - The purpose of this research is to analyze the effect of ownership structure toward earnings management. Methodology/Technique - The population of this research consist of manufacturing companies listed on t...
Why Is Non-Economic Information Important to Carbon Disclosure?
Objective - The purpose of this study is to provide the argument that carbon disclosure must not only provide economic but also non-economic information. The more comprehensive disclosure of carbon emission is expected t...