The Effect of Firm Value and Financial Performance on Earnings Management in Sharia Issuers: Evidence From the Indonesia Stock Exchange

Abstract

Earnings management is still an interesting focus of research from year to year. Research does not only focus on conventionally based entities but also moves to Sharia entities. This study aims to investigate the effect of firm value and financial performance on earning management. From the 20 sharia issuers that were successfully analyzed as samples, we found that, in general, there is no strong evidence that Islamic issuers practice earnings management, this can be seen from the positive average discretionary accruals. Referring to the discussion of the influence of firm value as measured by Tobin’s Q on the practice of earnings management, it was concluded that firm value had a significant effect on earnings management practices. This research has two contributions. Firstly this research is expected to contribute to market-based accounting research. Secondly, this study provides evidence of earnings management practices for Islamic entities.

The Mediation and Moderation Role of Knowledge Assets in Relationship Between Intellectual Capital Dimensions and Company Performances

“…The hypotheses testing indicate that human capital significantly and positively affect on performance of financial. This study results are consistent with Ting and Lean (2009), Alipour (2012), Clarke et al (2011), andOzkan et al (2017), (Muslim, 2020). This shows that manufacturing companies listed in IDX use knowledge resources are the main factor to face knowledge-based economy.…”

Factors Affecting the Level of Firm’s Ability to Create Value Relative to Capital Invested and Financial Distress Probability

“…Growth has unsignificant effect on the LACVIC, either directly or indirectly. Profitability which is proxied by return on assets (Muslim, 2020) has a positive and significant effect on the LACVIC, but it does not significantly increase the LACVIC through the probability of financial distress. From the coefficients and the significance level of the results of the research, it can be seen that the effect of profitability on probability of financial distres is bigger and stronger than its effect on value creation.…”

Managerial Ability And Earnings Management: Moderating Role Of Risk-Taking Behavior

“…The log nature of total assets calculates firm size. Market to assets value has a negative effect on earnings management as firms' earnings management will be assessed negatively by the market and have a lower market value (Muslim, 2020). Market to assets value is measured by the market value of the firm share (the number of shares is multiplied by market price) at the end of the year divided by total assets.…”

“…Market to assets value is measured by the market value of the firm share (the number of shares is multiplied by market price) at the end of the year divided by total assets. Firms with higher profitability tend to engage less in earnings management as they have already achieved higher performance (Muslim, 2020). Profitability is measured by the return on assets at the end of the previous year, as previous earnings are usually used as a benchmark for earnings management (Simamora, 2019).…”