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The Impact of Ownership Characteristics and Gender on Earnings Management: Indonesian Companies

Author

Listed:
  • Ari Kuncara Widagdo

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Rahmawati

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Djuminah

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Siti Arifah

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia
    Faculty of Economics and Business, Universitas Tidar, Magelang 56116, Indonesia)

  • Francisca Sestri Goestjahjanti

    (Faculty of Economics and Business, University of Insan Pembangunan Indonesia, Tangerang 15810, Indonesia)

  • Kiswanto

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia
    Faculty of Economics, Universitas Negeri Semarang, Semarang 50229, Indonesia)

Abstract

Earnings management is a behavior performed by management to show good performance to principals. This effort creates information bias in the study of agency theory, which in turn increases information asymmetry. In Indonesia, the average company has a family ownership structure. Therefore, this study aims to examine the effect of family ownership characteristics and gender on earnings management. This study includes gender diversity in the board of commissioners and board of directors. This research uses the non-financial companies’ data in Indonesian Capital Market. Furthermore, the data were analyzed using multiple regression based on ordinary least squares. Research results show that the proportion of females in both board of commissioners and board of directors, as well as company size contribute significantly to earnings management, whereas, family ownership, ROA, and leverage do not have a significant impact. This research provides a practical contribution to the study of the composition of the board of commissioners and directors regarding earnings management actions for owners, investors and other stakeholders.

Suggested Citation

  • Ari Kuncara Widagdo & Rahmawati & Djuminah & Siti Arifah & Francisca Sestri Goestjahjanti & Kiswanto, 2022. "The Impact of Ownership Characteristics and Gender on Earnings Management: Indonesian Companies," JRFM, MDPI, vol. 16(1), pages 1-15, December.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2022:i:1:p:17-:d:1016968
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    References listed on IDEAS

    as
    1. Velury, Uma & Jenkins, David S., 2006. "Institutional ownership and the quality of earnings," Journal of Business Research, Elsevier, vol. 59(9), pages 1043-1051, September.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Chen, Jie & Leung, Woon Sau & Goergen, Marc, 2017. "The impact of board gender composition on dividend payouts," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 86-105.
    4. Liu, Yu & Wei, Zuobao & Xie, Feixue, 2014. "Do women directors improve firm performance in China?," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 169-184.
    5. Faccio, Mara & Marchica, Maria-Teresa & Mura, Roberto, 2016. "CEO gender, corporate risk-taking, and the efficiency of capital allocation," Journal of Corporate Finance, Elsevier, vol. 39(C), pages 193-209.
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    Cited by:

    1. Mosab I. Tabash & Adel Ahmed & Linda Nalini Daniel & Yasmeen Elsantil, 2023. "Impact of Board Ownership Structure on Firm Value and Excessive Cash Holdings: Evidence from Pakistan," Advances in Decision Sciences, Asia University, Taiwan, vol. 27(3), pages 109-134, September.

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