Title: INFLUENCE OF INCOME TAX BURDEN, COMPANY SIZE, LEVERAGE, AND RETURN ON ASSET (ROA) ON PROFIT MANAGEMENT PRACTICES IN PUBLIC COMPANIES IN INDONESIA

Author: Endah Rahmi Yuanita

Affiliations: Master of Accounting Study Program, Faculty of Economics and Business, Universitas Airlangga Surabaya

Publisher: Universitas Airlangga

Abstract

Earnings management practices carried out by companies, especially public companies, are generally motivated by the desire of company management to increase the value of company shares that will be traded on the capital market, violations of anti-monopoly and anti-trust regulations, management compensation plans and debt covenants. Another reason for earnings management is to minimize taxes. This action will of course affect reported profits so that they cannot reflect the company's actual performance.

This research aims to determine the influence of income tax burden, company size, leverage, and return on assets (ROA) on earnings management practices in public companies in Indonesia, especially public companies in the manufacturing sector listed on the Jakarta Stock Exchange.

The problem raised in this research is whether income tax burden, company size, leverage and return on assets (ROA) partially and jointly have a significant effect on earnings management practices.

The population in this study are manufacturing companies listed on the Jakarta Stock Exchange, in the period 1999-2003, published financial reports and were not delisted during the research observation period, used rupiah currency units in their financial reports, positive equity balances and financial reports presented in full. . The sample used was 95 companies or 29% of the total research population determined using the purposive sampling method.

This research uses multiple linear regression analysis techniques. The t test is used to test the influence of each independent variable and the F test is used to test the influence of the independent variables together on the dependent variable.

The results of multiple linear regression analysis, the t test proves that: income tax burden has no significant effect on earnings management practices, company size has no significant effect on earnings management practices, leverage has no significant effect on earnings management practices, return on assets (ROA) has a significant effect on management practice. The F test proves that income tax burden, company size, leverage and return on assets (ROA) together have a significant effect on earnings management practices.

For future research, the sample used should also include non-manufacturing companies. Using other variables such as prevailing economic condition variables and company strategy variables in earnings management practices. Consider other models for calculating discretionary accruals, for example discretionary accrual surprises or changes between years as an indication of earnings management practices.

Keywords: Earning management, discretionary accrual, income tax expense, leverage, firm size, and return on assets

Sources: http://repository.unair.ac.id/36342/