The Effect of Leverage, Earning Power, and Sales Growth on Earnings Management Moderated by Corporate Governance

Abstract

This study aims to investigate analytically impact financial factors which are leverage, earning power, and sales growth affect earning management with corporate governance as a moderating variable. This research was conducted on manufacturing companies listed on the Indonesia Stock Exchange (IDX), specifically in food and beverage sub-sector from 2017 to 2019. This study uses 20 companies as sample that was selected using the purposive sampling method. This study uses multiple regression as analysis method which processed by Eviews 10.0. This research found that leverage does not affect earnings management significantly, while earning power positively and significantly affects earnings management. On the other hand, sales growth negatively and significantly affects earnings management. The corporate governance in this study does not moderate the impact of financial factor to earning management.