The Analysis of Deferred Tax Expense, Discretionary Accruals, and Operating Cash Flow Impact in Predicting Earnings Management of Indonesia Listed Companies in Retail Trade Sectors 2010-2016

Abstract

This research mainly aims to identify and analyze the influence of deferred tax expense, discretionary accruals, and cash flow operations to the earnings management practice. Data used in the research originated from audited annual financial statements of retail trade firms listed in the Indonesia Stock Exchange 2010-2016. The sampling method is used by purposive sampling. There are 35 samples to be analyzed by logistic regression. This research finds that discretionary accruals and cash flow operations have positive and significant impacts on the probability of earnings management practices whereas, the deferred tax expense have no significant effect on earnings management. This result shows that the use of discretionary accruals and cash flow operations as a proxy for earnings management is still valid.