Earnings Management Factors In The Consumer Goods Industry During The Covid-19 Pandemic

Abstract

The global proliferation of the Covid-19 pandemic has adversely impacted public health, society, and the economy. To face the pandemic, managers are frequently required to make highly complicated decisions about financial reports. Earnings management occurs when managers modify financial statements for the advantage of stakeholders by evaluating opportunities in certain business activities. This paper investigates the impact of audit opinion and tax incentives on earnings management and leverage as a moderating variable among consumer goods manufacturing companies. A purposive sampling technique was performed to select 15 manufacturers in the consumer goods industry subsector listed on the Indonesia Stock Exchange between 2019 and 2021, which matched the research criteria. This study's findings indicate that audit opinion and tax incentives influence earnings management among consumer goods companies in the COVID-19 pandemic era. Moreover, leverage was a moderating variable for audit opinion and earnings management, but it did not moderate the effect of tax incentives on earnings management.

Determinant Factors of the Companies to Do Tax Avoidance

“…Accounting standards allow management to choose policies that can apply accounting methods in conveying information about company's financial performance to external parties (Ardillah, 2018). To achieve earnings management objectives, the management can do planning activities to enhance the company's financial performance, such as holding the selling price and the number of sales so that the costs are fixed, determining the selling price to achieve profit targets, and targeting the number of products to be sold (Scott, 2015;Azizah & Mappanyuki, 2023).…”

Does COVID-19 Pandemic Impact on Financial Difficulties in Indonesian Tourism Sector Companies?

“…Strategically, the tourism sector provides employment for 12.7 million people or 10.5% of the total national workforce. The annual growth of Indonesia's tourism sector has also exceeded the average growth of other sectors in the national economy over the past 15 years (Dartiningsih, 2022) However, this positive contribution was interrupted by the emergence of the COVID-19 pandemic, which initiated a health and global financial crisis (Azizah, Thalib, et al, 2022), (Azizah, Fredy, et al, 2022). Restriction of movement, strict lockdown measures, and limitations on international transportation have made the tourism sector sluggish.…”