Universal Journal of Accounting and Finance Vol. 9(6), pp. 1582 - 1593
DOI: 10.13189/ujaf.2021.090635
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Governance Issues on Earning Management: A Case of Manufacturing Industry


Halil Paino 1,*, Tjut Intan Teuku Iskandar 2
1 Faculty of Accountancy, University Teknologi MARA, Malaysia
2 Federation of Malaysia Manufacturer, Kuala Lumpur, Malaysia

ABSTRACT

Earnings management is a technique used by the management of an organization to intentionally manipulate a company's profits in such a way that the figures suit the agreed target and to generate financial results that provide an excessively optimistic view of the company's operation and finances. Due to poor performance, companies are using different strategies to exploit and provide a positive picture of financial and management profitability to look better in the eyes of shareholders and stakeholders, and this is generally referred to as earnings management. This study aims to examine the potential factors of pressure (financial stability and financial target), opportunity (board independence and audit committee), and arrogance (CEO duality and the CEO's picture) that cause earnings management in manufacturing companies in Malaysia. This study used organizations as the unit of analysis while manufacturing companies from the Public Listed Companies (PLCs) were chosen as the research sample. This study found that the proxies of board independence, audit committee, and CEO's picture have a positive relationship with earnings management. Adversely, the indicators of financial stability, financial target, and CEO duality have negative effects on the incidence of earnings management.

KEYWORDS
Modified Jones Model, Discretionary Accruals, Crowe's Pentagon Model

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Halil Paino , Tjut Intan Teuku Iskandar , "Governance Issues on Earning Management: A Case of Manufacturing Industry," Universal Journal of Accounting and Finance, Vol. 9, No. 6, pp. 1582 - 1593, 2021. DOI: 10.13189/ujaf.2021.090635.

(b). APA Format:
Halil Paino , Tjut Intan Teuku Iskandar (2021). Governance Issues on Earning Management: A Case of Manufacturing Industry. Universal Journal of Accounting and Finance, 9(6), 1582 - 1593. DOI: 10.13189/ujaf.2021.090635.