Differences In The Impact Of Good Corporate Governance On Discretionary Accrual And Real Earnings Management

Abstract

The purpose of this study is to determine the effect of Good Corporate Governance to Earnings Management. The earnings management in this study was measured by Discretionary Accrual and Real Earnings Management. This study used Jones Modified Model (1991) as proxy of discretionary accrual. To measure real earnings management we used three measures, namely abnormal cash flow, abnormal production cost and abnormal expenditure. This research was conducted on manufacturing companies listed on the Indonesia Stock Exchange. The period of this research is 2015 to 2018. Using the purposive sampling method, the results of the sample selection are 168 firm-years.

The analytical data method used multiple regression analysis. The result shows that Good Corporate Governance has no effect on Discretionary Accrual.  On the other hand, GCG has a negative effect on earnings management as measured by the three real activities, namely abnormal cash flow, abnormal production costs and abnormal discretionary expenditure