The purpose of this study is to examine the impact of corporate governance
mechanism to the earnings management (discretionary accruals) in the
manufacturing companies. Corporate governance mechanisms in this study are
institutional ownership, managerial ownership, independent board composition,
independent audit committee composition, and audit firm size.
The populations in this study are manufacturing companies which listed on BEI
in the year 2012-2014. With the sampling method is purposive sampling. The method
of selecting the data used in this research is purposive sampling method. This
research was conducted by using documentation method which used data from
annual report listed in Indonesia Stock Exchange (BEI) and the data from Indonesian
Capital Market Directory (ICMD). The method of data analysis is used an OLS
(Ordinary Least Square) regression. The total number of samples for this study is 219
companies. But, there are found 23 samples as outlier should be excluded from
sample observation. So, the final samples for this study are 193 companies.
The results of this research showed that independent board composition,
independent audit committee composition, managerial ownership and institutional
ownership had negatively affected to the earnings management. Meanwhile, audit
firm size had no significantly affected on earnings management. This result showed
that corporate governance mechanism be able to reduce earnings management