PENGARUH PERGANTIAN CEO, PENGHINDARAN PAJAK DAN KOMPENSASI EKSEKUTIF TERHADAP MANAJEMEN LABA (STUDI EMPIRIS PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA)

ABSTRACTThis study aims to examine the influence of CEO turnover, tax avoidance and executive compensation on earnings management, by using discretionary accruals as a proxy of earnings management.The samples of this research are the manufacturing firms listed in IDX (Indonesia Stock Exchange) in 2011-2015. The Samples are collected using purposive sampling method and resulted 24 companies become the final samples. Data of CEO turnover, tax avoidance and executive compensation were collected from annual report, then data analyzed using multiple regression analysis.The results of this research show that (1) CEO turnover, tax avoidance and executive compensation simultaneously have influence on earnings management, (2) CEO turnover has influence on earnings management, (3) tax avoidance has influence on earnings management, and (4) executive compensation has no influence on earnings management.Keywords: CEO Turnover, Tax Avoidance, Executive Compensation, Earnings Management. ABSTRAKTujuan penelitian ini adalah untuk menguji pengaruh pergantian CEO, penghindaran pajak dan kompensasi eksekutif, baik secara simultan maupun secara parsial, terhadap manajemen laba dengan menggunakan discretionary accruals sebagai proksi dari manajemen laba.Sampel pada penelitian ini adalah perusahaan manufaktur yang terdaftar di BEI (Bursa Efek Indonesia) tahun 2011-2015. Sampel dikumpulkan berdasarkan pada metode purposive sampling dan menghasilkan 24 perusahaan sebagai sampel akhir. Data pergantian CEO, penghindaran pajak dan kompensasi eksekutif dikumpulkan dari laporan tahunan, kemudian data yang diperoleh selanjutnya dianalisis menggunakan analisis regresi berganda.Hasil penelitian ini menunjukkan bahwa (1) pergantian CEO, penghindaran pajak dan kompensasi eksekutif secara simultan berpengaruh terhadap manajemen laba, (2) pergantian CEO memiliki pengaruh terhadap manajemen laba, (3) penghindaran pajak memiliki pengaruh terhadap manajemen laba, (4) kompensasi eksekutif tidak memiliki pengaruh terhadap manajemen laba.Kata kunci: Pergantian CEO, Penghindaran Pajak, Kompensasi Eksekutif, Manajemen Laba

Pergantian Ceo, Penghindaran Pajak, Kompensasi Eksekutif dan Manajemen Laba Studi Kausalitas pada Perusahaan Manufaktur Indonesia

This study aims to examine the influence of CEO turnover, tax avoidance and executive compensation on earnings management by using discretionary accruals as a proxy of earnings management. The samples of this research were the manufacturing firms listed in BEI (Indonesia Stock Exchange) between 2011 and 2015. The samples were selected by using purposive sampling on 24 companies with 120 observations. The Data were collected from annual report and data analyzed by multiple regression analysis. The results of this study shows that CEO turnover has influence on earnings management, tax avoidance has influence on earnings management, and executive compensation has no influence on earnings management

Three essays on Earnings Management Evidence from UK

This thesis was submitted for the award of Doctor of Philosophy and was awarded by Brunel University LondonThe first essay researches the impact of the board characteristics on earnings management. Earnings management is a dependent variable and a proxy for discretionary accruals, which is predicted by applying three discretionary accruals models that include Jones model, modified Jones model and Kothari model. Independent variables comprise of board characteristics. The sample comprised of all listed companies on FTSE-350 from 2007 to 2018. Based on the results and findings of the Jones model, modified Jones model Kothari model and earnings management model, this research study provides empirical evidence proving the impact of the board size, board independence and gender diversity on the earnings management which is shown to be negative, implying larger boards with higher number of independent directors and female directors are in a better position to oversee the management activities and ensure higher quality of financial information. However, the impact of the CEO duality and board activity on earnings management is positive, illustrating that boards in which both positions CEO and board chairman are holding by one person and the board meets more frequently loses its control over necessary practices such as controlling earnings management. The prime objective of second research study is to study and understand the impact of the audit committee characteristics on the discretionary accruals in the companies listed on FTSE 350 from 2007 to 2018. The chosen period important because, the chosen period provides a window to test the Smith Report’s recommendations for audit committees following the issue of the UK Code and to understand to what extent; the recommended characteristics of the audit committee can help the companies to improve the quality of financial reporting. In this research study, earnings management is a dependent variable, whereas audit committee characteristics comprise of independent variables that include audit committee size (ACS), audit committee independence (ACI), members on the audit committee having a background in accounting or finance or both (ACFEX) and the frequency of the audit committee meetings during a year (NACM). The empirical findings of the relationship between earnings management and audit committee characteristics show that ACS is negatively associated to earnings management, ACI is positive related to earnings management, ACFXP and earnings management are negative related, and the number of audit committee meetings (NACM) is negatively related to earnings management. Third essay empirically tests the impact of the CEO’s and executive’s compensation on the discretionary accruals. To better understand the relationship of the CEO’s and executive’s compensation with discretionary accruals, the entire compensation is decomposed, and the impact of each component of the total compensation is tested on the discretionary accruals. Earnings management is the dependent variable, which is the proxy for the discretionary accruals. The components of the CEO’s and executive’s compensation are independent variables, which include the CEO’s total compensation, executive total compensation, CEO’s equity-based compensation, executive’s equity-based compensation, CEO’s salary, executive’s salary, CEO’s bonus, executive’s bonus, CEO equity to total compensation ratio and executive’s equity to total compensation ratio. For this, a sample comprising of all listed companies on FTSE 350 is used. The sample period is from 2007 to 2018 and employs the annual data because most of the companies prepare and publish their financial statements annually. The empirical results and findings of this research study show that the CEO equitybased compensation, CEO bonus, CEO equity-based compensation to total compensation ratio, executive’s equity-based compensation, executive’s salary and executive’s equity-based compensation to total compensation ratio are positively related to earrings management, whereas, CEO total compensation, CEO salary, executive total compensation and executive’s bonus are negatively related with the earnings management

Does the CEO manipulate earnings prior to routine departure? – An empirical study about earnings management prior to routine CEO departure on Swedish firms listed on NASDAQ OMX Stockholm

Title: Does the CEO manipulate earnings prior to routine departure? – An empirical study about earnings management prior to routine CEO departure on Swedish firms listed on NASDAQ OMX Stockholm Seminar Date: 2015-05-25 Course: FEKN90: Degree project, Master of Science in Business and Economics (30 University credit points) Authors: Biljana Colevska and Ida Lindgren Advisor: Per Magnus Andersson Key words: Routine CEO departure, earnings management, discretionary accruals, research and development expenditures, Swedish public market Purpose: The aim of the study is to empirically describe and analyze whether and if so why CEOs on Swedish public firms, listed on NASDAQ OMX Stockholm, use earnings management prior to routine CEO departures. Theoretical perspective: This study is based on prior research that examines the relationship between routine CEO departures and the use of earnings management and literature on earnings management. Furthermore, the theories used in this thesis are based on the agency theory, the stakeholder and shareholder theory, compensation, corporate governance and ownership structure. Methodology: A quantitative study is made with a deductive approach by running a cross sectional regression to measure the use of discretionary accruals and a panel data regression on the explanatory variables. Furthermore, a panel data regression is used to measure the use of research and development expenses prior to a routine CEO departure. Empirical foundations: The analysis includes companies listed on NASDAQ OMX Stockholm with a routine CEO departure between the period 2007 to 2014. Conclusion: Real earnings management occurs prior to routine CEO departures, while there tends to be less use of accruals management. A negative significant relationship is found between board independence, institutional ownership, market capitalization and earnings management. A positive significant relationship is found between the market book ratio and earnings management

Welcome to the Gray Zone: Shades of Honesty and Financial Misreporting

We examine the influence of CFO/CEO honesty perceptions on earnings management for the largest publicly traded companies in America, and show that visual cues play a significant role. Specifically, after controlling for incentives (i.e. stock-based compensation, bonuses, leverage) and opportunities (i.e. auditor independence, internal control deficiencies), members of senior management perceived to be less honest engage in higher levels of both accruals management and real earnings management. Interestingly, the beneficial impact of perceived honesty on earnings quality is most pronounced when both the CFO and the CEO are perceived to be honest. Findings are consistent with our conjecture that both the CFO and CEO independently contribute to a firm’s reporting environment

Manajemen Laba Pada Saat Pergantian CEO (Dirut) Di Indonesia

This study investigates earnings management of CEO changes in Indonesia. CEO change is classified either as routine or non-routine based on RUPS (General Shareholders Meeting) and RUPSLB (Extraordinary General Shareholders Meeting) information. The samples are listed company undergoing CEO changes in the Indonesian Stock Market observed from 2000 to 2009. To identify the earnings management practice, modified Jones model of discretionary accruals and Rowchordory\u27 of real earnings management are employed. The study provides evidence of non-routine incoming CEO undertaking earnings management by minimizing the earnings in the year of CEO change. The evidence shows that reporting minimum earnings is consistent with the notion of new CEO\u27s engagement in an ‘earnings bath\u27. However, this study does not support the theory of management compensation contracts during routine CEO changes. In addition, the incumbent CEO in the non-routine changes does not practice earnings management in the final year before the change. Therefore, manipulating earnings is not the argument to a non routine change of CEO

The Persistence of Earnings and Corporate Governance in IPO Firms

In this study, we investigate the earnings persistence in IPO firms by examining the two components of earnings: accruals and cash flows. We also analyze the impact of corporate governance on earnings and the two earnings components. In our comparison of the top and bottom quartiles based on the firms\u27 earnings at the IPO year, we find that although the top quartile firms have a significantly positive accrual component in the IPO year, they eventually have the same negative accrual component of earnings as the bottom quartile firms in the second year after the IPO. In contrast, we find that the significant difference in the cash flow component between the top and bottom quartiles persists during the two years after the IPO. This finding supports the existing literature that the cash flow component contributes to the persistence of earnings while the accrual component does not. We also find that the corporate governance structure has a significant impact on earnings and the components of earnings for the top quartile firms, but not for the bottom quartile firms. This is particularly evident since the top quartile firms have the opportunity to manage their earnings, while firms in the lowest quartile are unable to manage their earnings

Managing Earnings for My Boss? Financial Reporting and the Balance of Power between CEOs and CFOs

This paper investigates how the use of earnings management and aggressive financial reporting is related to the balance of power between chief executive officers (CEOs) and chief financial officers (CFOs). I use nationwide awards that recognize CFO excellence as exogenous shocks to the CFO job-market status. I find that, compared to their matched non-awardee counterparts, awardee CFOs experience a sharp increase in career opportunities, total compensation, and stock/option grants, as well as a substantial decrease in CEO power over them. Consistent with the view that shifts in bargaining power between the CEO and CFO matter in earnings management, I find that awardees’ firms have a significantly smaller magnitude of discretionary accruals than both non-awardees and pre-award periods. In addition, winning the award has a substantially negative effect on positive accruals, while the positive effect on negative accruals is less significant. Moreover, the award effects on reducing the magnitude of discretionary accruals are significant only when CFOs face powerful CEOs. I also find evidence that earnings restatements among firms with awardees are less common and receive a less negative market reaction. Overall, my findings suggest that the balance of power between CEOs and CFOs plays an important role in the quality of financial reporting

The use of accruals to manage reported earnings: theory and evidence

This paper develops a model in which firm managers maximize their own compensation by using accruals to manage reported earnings. The results of the model suggest that the form of the managerial compensation function and managerial time preferences may have an important influence on the relationship between accruals and latent earnings. Among the possible relationships suggested by the model are strategies we call Smooth Income, Occasional Big Bath, Live for Today, and Maximize Variability, each of which suggests a different reporting strategy pursued by managers. Most empirical tests of accruals are inconsistent with this and other theoretical models because they include a single earnings variable in a linear regression analysis. Instead, we document the reporting of accruals by two firms, Sunbeam and Citicorp, that is consistent with the “Live for Today” and “Occasional Big Bath” strategies.Investments