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Determinant of non-GAAP earnings management practices and its impact on firm value

Author

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  • Ewing Yuvisa Ibrani
  • Faisal Faisal
  • Yenny Dwi Handayani

Abstract

This study aims to examine the factors that explain the reasons why non-GAAP earnings management is carried out based on the fraud diamond theory (FDT). FDT is a theory widely used in behavioral research to explain the factors that cause fraud in a company. In addition, this study also explains the impact of non-GAAP earnings management practices on firm value. This study investigates 42 non-bank and financial companies listed on Indonesia Stock Exchange (IDX) for the period 2010–2017. The results of the logistic regression analysis founded that opportunity and ability were the most dominant factors causing non-GAAP earnings management. The findings of this study show that in Indonesia, there is need for greater attention from the regulators to the opportunity and capability factors to reduce the occurrence of non-GAAP earnings management.

Suggested Citation

  • Ewing Yuvisa Ibrani & Faisal Faisal & Yenny Dwi Handayani, 2019. "Determinant of non-GAAP earnings management practices and its impact on firm value," Cogent Business & Management, Taylor & Francis Journals, vol. 6(1), pages 1666642-166, January.
    • Handle: RePEc:taf:oabmxx:v:6:y:2019:i:1:p:1666642
    DOI: 10.1080/23311975.2019.1666642
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    Cited by:

    1. Katarina Valaskova & Peter Adamko & Katarina Frajtova Michalikova & Jaroslav Macek, 2021. "Quo Vadis, earnings management? Analysis of manipulation determinants in Central European environment," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 631-669, September.
    2. Huma Fatima & Abdul Haque & Muhammad Usman, 2020. "Is there any association between real earnings management and crash risk of stock price during uncertainty? An evidence from family-owned firms in an emerging economy," Future Business Journal, Springer, vol. 6(1), pages 1-12, December.

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