Earnings Management Practices in Indonesia: Before and During COVID-19
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Dec 28, 2024
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Abstract
The purpose of this study is to compare earning management practices in manufacturing company before and during COVID-19 pandemic. The study use 495 manufacturing companies listed on the Indonesian Stock Exchange from 2017 to 2022 as sample. Earning management are compared between 2017-2019 (prepandemic year) and 2020-2022 (pandemic year). Wilcoxon Signed Ranks Test are performed to compared between prepandemic year and pandemic year. The finding show that earnings management before COVID-19 is different from earning managements during COVID-19. There was a significant increasing discretionary accruals from 2017 to 2022, suggesting the firms engaged in more income increasing strategy to reported earnings at the pandemic year. The existence of the COVID-19 pandemic motivate management to do the earnings management. This study explores the consequences of the pandemic to earning management activity also enriches accounting research on economic crisis.
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References
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Scott, W. R. (2015). Financial Accounting Theory. Seventh Edition. Pearson Prentice Hall: Toronto. www.pearsoncanada.ca.
Sekaranti, N. A., & Juliarto, A. (2022). Analisis Manajemen Laba dan Relevansi Nilai Laba Sebelum dan Selama Pandemi Covid-19. Diponegoro Journal of Accounting, 11(4), 1–15. http://ejournal-s1.undip.ac.id/index.php/accounting
Setiawati, L., & Na’im, A. (2000). Manajemen Laba. Jurnal Ekonomi Dan Bisnis Indonesia, 15(4), 424–441.
Ulfah, Y., Ambarita, N. P., Hidayani, Yudaruddin, R., & Lesmana, D. (2022). Board Structure and Earning Management: a Comparative Study Between the Pre-Pandemic and During the Covid-19 Pandemic Periods. Corporate and Business Strategy Review, 3(2), 177–187. https://doi.org/10.22495/cbsrv3i2art16
Aljughaiman, A. A., Huy, T., Quang, V., & Du, A. (2020). Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID- 19 . The COVID-19 resource centre is hosted on Elsevier Connect , the company ’ s public news and information. January.
Angelina, M., & Lindrawati, L. (2022). Analisis Perbandingan Manajemen Laba Sebelum dan Saat Covid-19 Pada Perusahaan Manufaktur di Bursa Efek. Jurnal Akuntansi Indonesia, 11(2), 121. https://doi.org/10.30659/jai.11.2.121-132
Chen, R. C. Y., & Hung, S. W. (2021). Exploring the impact of corporate social responsibility on real earning management and discretionary accruals. Corporate Social Responsibility and Environmental Management, 28(1), 333–351. https://doi.org/10.1002/csr.2052
Cucinotta, D., & Vanelli, M. (2020). WHO declares COVID-19 a pandemic. Acta Biomedica, 91(1), 157–160. https://doi.org/10.23750/abm.v91i1.9397
Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Dechow_et_al_1995.pdf. In The accounting Review (Vol. 70, Issue 20, pp. 193–225).
Dong, N., Wang, F., Zhang, J., & Zhou, J. (2020). Ownership structure and real earnings management: Evidence from China. Journal of Accounting and Public Policy, 39(3), 106733. https://doi.org/10.1016/j.jaccpubpol.2020.106733
Fang, M., Francis, B., Hasan, I., & Wu, Q. (2022). External social networks and earnings management. British Accounting Review, 54(2), 101044. https://doi.org/10.1016/j.bar.2021.101044
Garfatta, R. (2023). COVID-19 outbreak and earnings management practice : case of Tunisia. https://doi.org/10.1108/AJAR-04-2022-0129
Griffin, P. A., Hong, H. A., Liu, Y., & Ryou, J. W. (2021). The dark side of CEO social capital: Evidence from real earnings management and future operating performance. Journal of Corporate Finance, 68 (September 2020), 101920. https://doi.org/10.1016/j.jcorpfin.2021.101920
Guggenmos, R. D., & Van der Stede, W. A. (2020). The Effects of Creative Culture on Real Earnings Management*. Contemporary Accounting Research, 37(4), 2319–2356. https://doi.org/10.1111/1911-3846.12586
Gumiwang, A. (2021). Kemenperin: Sektor Manufaktur Tumbuh Agresif di Tengah Tekanan Pandemi. https://kemenperin.go.id/artikel/22681/sektor-manufaktur-tumbuh-agresif-di-tengah-tekanan-pandemi-
Hoitash, U., & Mkrtchyan, A. (2022). Internal governance and outside directors’ connections to non-director executives. Journal of Accounting and Economics, 73(1), 101436. https://doi.org/10.1016/j.jacceco.2021.101436
Jensen, M. ., & Meckling, W. . (1976). Theory Of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305–360. https://doi.org/10.1177/0018726718812602
Jones, J. J. (1991). Earnings Management During Import Relief Investigations. Journal of Accounting Research, 29(2), 193. https://doi.org/10.2307/2491047
Kałdoński, M., Jewartowski, T., & Mizerka, J. (2020). Capital market pressure, real earnings management, and institutional ownership stability - Evidence from Poland. International Review of Financial Analysis, 71(November 2018), 1–20. https://doi.org/10.1016/j.irfa.2019.01.009
Kazemi, S. M. (2022). Impact of COVID-19 Pandemic on Earnings Management: The European Union Empirical Evidence Title of thesis: Impact of COVID-19 Pandemic on Earnings Management: The European Union Emperical Evidence.
Lassoued, N., & Khanchel, I. (2021). Impact of COVID-19 Pandemic on Earnings Management: An Evidence from Financial Reporting in European Firms. Global Business Review, November. https://doi.org/10.1177/09721509211053491
Liu, G., & Sun, J. (2022). The impact of COVID-19 pandemic on earnings management and the value relevance of earnings: US evidence. Managerial Auditing Journal, 37(7), 850–868. https://doi.org/10.1108/MAJ-05-2021-3149
Ministry of Industry. (2021). Sektor Manufaktur Tumbuh Agresif di Tengah Tekanan Pandemi. Retrieved from https://kemenperin.go.id/artikel/22681/Sektor-Manufaktur-Tumbuh-Agresif-di-Tengah-Tekanan-Pandemi-.
Ramdani, R. F., Pratomo, D., & Zuliansyah, A. (2022). Pengaruh pandemic COVID-19 terhadap perilaku manajemen laba. Jurnal Akuntansi Dan Pajak, 23(1), 1–9.
Ryu, H., & Chae, S. J. (2022). The Impact of COVID-19 on Earnings Management in the Distribution and Service Industries. Journal of Distribution Science, 20(4), 95–100. https://doi.org/10.15722/jds.20.04.202204.95
Scott, W. R. (2015). Financial Accounting Theory. Seventh Edition. Pearson Prentice Hall: Toronto. www.pearsoncanada.ca.
Sekaranti, N. A., & Juliarto, A. (2022). Analisis Manajemen Laba dan Relevansi Nilai Laba Sebelum dan Selama Pandemi Covid-19. Diponegoro Journal of Accounting, 11(4), 1–15. http://ejournal-s1.undip.ac.id/index.php/accounting
Setiawati, L., & Na’im, A. (2000). Manajemen Laba. Jurnal Ekonomi Dan Bisnis Indonesia, 15(4), 424–441.
Ulfah, Y., Ambarita, N. P., Hidayani, Yudaruddin, R., & Lesmana, D. (2022). Board Structure and Earning Management: a Comparative Study Between the Pre-Pandemic and During the Covid-19 Pandemic Periods. Corporate and Business Strategy Review, 3(2), 177–187. https://doi.org/10.22495/cbsrv3i2art16