Audit Committee: Woman, Experience, Education on Earnings Management

Abstract

The purpose of this research is to obtain empirical evidence about the effect of board size, board independence, directors expertise, board meetings, audit committee expertise, audit committee meetings, audit committee woman, audit committee education, concentrated shareholders, and managerial ownership on earnings management. The population in this research is all listed manufacturing companies in Indonesia Stock Exchange during 2013 to 2016. Samples are obtained through purposive sampling method, in which 66 listed manufacturing companies in Indonesia Stock Exchange meet the sampling criteria resulting 264 data available are taken as sample. Multiple linear regressions and hypothesis testing are used as the data analysis method in this research. The result of this research shows that audit committee woman statistically has influence earnings management. While board size, board independence, directors expertise, board meetings, audit committee expertise, audit committee meetings, audit committee education, concentrated shareholders, and managerial ownership statistically do not have influence earnings management. If the number of woman in audit committee is higher, the level of earnings management will be lower and vice versa. Woman audit committee may be more conservative and have higher ethical value.

Female Representation, Corporate Governance, and Earning Management in Indonesian Non-Financial Firms

“…Kumaat (2013) and Lawal, Nwanji, Opeyemi, and Adama (2018) found that independent commissioners have a negative effect on earnings management. Similar research was produced by research conducted by Kapoor andGoel (2017), andFlorencea andSusanto (2018) found that the size of the board of commissioners does not affect earnings management. Kumaat (2013) found that independent commissioners positively affect earnings management, and the audit committee does not affect earnings management.…”

“…Women's qualities on audit committees have the potential to worsen profit management. The result is supported by research conducted by Thiruvadi and Huang (2011), Qi and Tian (2012), Salleh, Hashim, Mohamad (2012), Susanto (2016), and Florencea and Susanto (2018). Research conducted by Loualalen, Khemakhem, and Fontaine (2015) and Abdullah and Ismail (2016) found that gender on the audit committee did not affect profit management.…”

“…It can reduce profit management. Florencea and Susanto (2018) and Susanto (2016) also found that women's audit committees could reduce profit management at manufacturing companies in Indonesia.…”

Female in board and earnings management: Evidence in Indonesia non-financial firms

“…The characteristics of women on the audit committee can reduce earnings management. This is supported by research conducted by Thiruvadi & Huang (2011), Qi & Tian (2012), Salleh et al (2012), Susanto (2016), and Florencea & Susanto (2019). The opposite was obtained from research conducted by Loualalen et al (2015), and Abdullah & Ismail (2016) found that gender on the audit committee had no effect on earnings management.…”

“…This is supported by research conducted by Zalata et al (2018), Salleh et al (2012), Thiruvadi & Huang (2011), who found that women's audit committees can reduce earnings management. Florencea & Susanto (2019) and Susanto (2016) also found that women's audit committees can reduce earnings management in manufacturing firms in Indonesia. H 3 : More female presence on the audit committee has a negative effect on earnings management…”