Title: The Influence of Company Size, Debt Level, and Ownership Level on Profit Management Before and After Changes in Corporate Income Tax Rates in 2000
Author: Siswo Pranoto
Affiliations: Master of Accounting Study Program, Faculty of Economics and Business, Universitas Airlangga Surabaya
Publisher: Universitas Airlangga
Abstract
Often in reporting a financial report, company management tends to manipulate it to maximize the interests of each party. Managers realize that there is not enough information, which will encourage inappropriate behavior by carrying out earnings management practices.
This research seeks to examine and obtain empirical evidence whether the factors for changes in corporate income rates in Law no. 17 of 2000 concerning Income Tax, which results in a decrease in the amount of tax payable which will have an impact on the company's earnings management behavior. This research also examines and tries to obtain empirical evidence whether earnings management behavior carried out by company management will be influenced by company size, level of debt and level of ownership.
The results of research using multiple regression and difference tests for the first hypothesis prove that changes in corporate tax rates have an impact on company earnings management behavior. This is indicated by the value of the earnings management test results which prove that the discretionary accrual value after changes in the corporate income tax rate is higher than the discretionary accrual value before the change in the corporate income tax rate. This means that company management tends to postpone its income in 2000, where the corporate income tax rate is still high, and then recognize it as income in 2001, where the corporate income tax rate is lower, so that the company can obtain tax savings.
This research also finds evidence that earnings management actions can be influenced by company size and the level of company debt, while the level of company ownership does not have a significant influence on earnings management actions.
Company size has a negative and significant effect on earnings management, this means that the larger the company size, the company tends not to carry out earnings management by shifting its income from 2000 to 2001 to obtain savings on corporate income tax. This happens because for large companies the reduction in corporate income tax rates is not significant enough to encourage them to shift their income from 2000 to 2001 in order to obtain reductions in corporate income tax, there are many other interests that are more valuable than obtaining savings in corporate income tax.
The level of debt has a positive and significant effect on profit management, this means that companies with high levels of debt tend to increase their profits because apart from minimizing losses arising from violations of credit agreements, it is also due to providing a good appearance of company performance in the eyes of creditors. and investors, so despite debt levels. high company profits remain high.
The level of management ownership does not have a significant influence on profit management. This indicates that earnings management practices are not supported by the variable level of management ownership, this occurs because of ownership
Keywords: Earning Management, Firm Size, Debt Level, Manager Ownership, Corporate Income tax rate.
Sources: http://repository.unair.ac.id/34436/
