The Influence Of Profitability, Good Corporate Governance And Leverage On Profit Management In Manufacturing Companies Listed On The Idx (2016-2022)

Abstract

The aim of this research is to determine the influence of profitability, good corporate governance, and leverage on earnings management in manufacturing companies listed on the IDX (2016-2022). Earnings management is proxied using Financial Performances as the dependent variable. The independent variables in the study are Profitability, proxied using Return on Assets (ROA), Good Corporate Governance proxied with Managerial Ownership and Institutional Ownership, and Leverage Proxied with Debt Ratio. The study uses 32 manufacturing companies listed on the IDX as the research sample. The sampling method employed in this study is purposive sampling. The analytical technique used is panel data regression. The research findings for the manufacturing sector during the period 2016-2022 indicate that profitability (ROA) has a significant positive influence on earnings management (financial performance), good corporate governance (managerial and institutional ownership) has a significant positive influence on earnings management (financial performance), and leverage (debt ratio) has a significant positive influence on earnings management (financial performance). However, before the pandemic, other than institutional ownership had no significant effect. This study contributes to the literature on the impact of profitability, good corporate governance, and leverage on earnings management, providing investors with more information to consider financial and asset ratios in companies. Additionally, this study has limitations as it focuses only on the manufacturing sector, and the findings may not be reflective of the sectors not included in the research sample. Future researcher may consider a broader sample, not limited to manufacturing companies, but including other listed on the IDX, as results may vary.