THE ANALYSIS OF FIRM SIZE, LEVERAGE, ASYMMETRY INFORMATION, MANAGERIAL OWNERSHIP, RETURN ON ASSETS, AND SALES GROWTH IMPACT TOWARDS EARNINGS MANAGEMENT OF INDONESIAN LISTED COMPANIES IN MANUFACTURING INDEX FOR PERIOD OF 2011-2013

Abstract

This study examined and analyzed the factors that affecting the earnings management of the companies in Indonesia Stock Exchange category Manufacturing Index in 2011-2013. This study uses purposive sampling byseparating the sample into companies with Big Four external audit (48 sample) and companies with Non-Big Four External Audit (44 sample) with the same average of firm size.This study used multiple regression model with 5% significant level. To identify earning management, the researcher uses the Jones model (1991) as modified by Dechow and Sloan (1996) to separate non-discretionary accrual (NDA) components from discretionary accrual components (DA) in the total accrual. The results of this study showed that in companies with Big Four external audit, leverage and sales growth have significant effect towards earnings management. Meanwhile, firm size, asymmetry information, managerial ownership, and return on assets have not significant impact towards earnings management. Simultaneously, firm size, leverage, asymmetry information, managerial ownership, return on assets and sales growth have significant impact towards earnings management with 20.7% adjusted R2. However the regression model is not fit for sample of companies with Non-Big Four external audit. It leads the researcher into two possibilities that the information from companies with Non-Big Four external audit is less reliable or this research model is not fit to predict the earnings management in companies with Non-Big Four external audit. Therefore, the further investigation is suggested for the next research.