Past Performance and Earnings Management: The Effect of Free Cash Flow

• 발행기관: 한국유통과학회
• 저자명: Martdian Ratna SARI Bramantyo DJOHANPUTRO Ronny KOUNTUR
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.1, 37~43쪽, 전체 7쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.01.30

영문 초록

The main objective of this study is to discuss the effect of free cash flow as a moderating variable on managers’ decisions as regard earnings management. Companies with free cash flow are expected to refrain from taking opportunistic actions such as earnings management. The research used quantitative methods with sub-group moderating analysis. It is found that there is a significant relationship between past performance and earnings management, where the free cash flow is the moderating variable. The effect of past performance on earnings management is shown to slightly increase as free cash flow is considered. The findings of this study prove that earnings management is a practice that is often done by utilizing the flexibility of accounting recording and recognition mechanisms. Past performance becomes the main variable in encouraging managers to manage earnings by reducing revenue in the current period. This research can also be a reference in explaining managerial behavior and can be a reference to improving ethical human resource capabilities. This research focuses on companies in Indonesia that conduct earnings management by lowering profits as a result of declining past performance and examines aspects of free cash flow that reinforces the conduct of earnings management.

목차

1. Introduction

2. Literature Review

3. Research Methods and Materials

4. Research Results

5. Discussion

6. Conclusions

References

키워드

Earning Management Past Performance Free Cash Flow