Determinants of Earnings Management on the Moderating Role of GCG: Empirical Evidence on the BEI Non-Financial Sector

Muhammad Faried Rizki; Mirna Indriani; Indayani Indayani

doi:10.55927/jfbd.v4i2.229

Authors

Muhammad Faried Rizki Universitas Syiah Kuala
Mirna Indriani Universitas Syiah Kuala
Indayani Indayani Universitas Syiah Kuala

DOI:

https://doi.org/10.55927/jfbd.v4i2.229

Keywords:

Free Cash Flow, Financial Leverage, Good Corporate Governance, Earnings Management

Abstract

This study investigates the impact of financial leverage (FL) and free cash flow (FCF) on earnings management, with good corporate governance (GCG) as a moderating factor. Using data from 352 non-financial firms listed on the Indonesia Stock Exchange (2020-2023) and analyzed with SPSS 25, the findings reveal that both FL and FCF have a significant positive effect on earnings management. The practical implications of this study suggest that company management should minimize earnings management practices and focus on achieving sustainable long-term goals through effective implementation of GCG. This study focuses on non-financial companies, considering that this sector is more dominant during the study period than the financial sector. In addition, non-financial companies are recorded as the largest dividend contributors, thus providing a relevant context for examining earnings management practices and the role of GCG.

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