Abstract:
This study aims to analyze the relationship among tax planning, managerial
ownership, leverage and company size toward earnings management on the nonmanufacturing companies from LQ45 index listed in Indonesia Stock Exchange in 2011 to 2014. The samples used in this study are 60 samples. The analysis method used is multiple regression analysis with 5% significant level. Multiple regression analysis is used to determine the effect that occurs between Independent variables toward earnings management. To identify earnings management, researcher uses profit distribution approach (Phillips et al., 2003). Profit distribution approach identifies the reporting limit profit (earnings thresholds) and found that companies that are under earnings thresholds will try to get past this limit by performing earnings management. Philips et al. (2003)
states that managers perform earnings management with profit distribution approach because managers are aware that external parties, especially investors, banks, and suppliers using the reporting limit profits in assessing the performance of managers. The result of this research indicates that, Tax Planning, Leverage, and Company Size Variables statistically have no significant effect toward the earnings management practices. Meanwhile, Managerial Ownership Variable statistically has significant effect toward earnings management practices. Simultaneously tax planning, managerial ownership, leverage, and company size statistically have significant effect toward earnings management practices. Then, the R2 analysis showed that the regresion model is able to describe earnings management practices by 23,1%. The rest 76,9% is explained by other factor apart from this research.
