Analysis the Effect of Financial Distress, Leverage and Free Cash Flow on Earnings Management

Rifka Aulia Inayah ()
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Rifka Aulia Inayah: Department of Accounting, Hasanuddin University, Indonesia Author-2-Name: Amiruddin Author-2-Workplace-Name: Department of Accounting, Hasanuddin University, Indonesia Author-3-Name: Grace T. Pontoh Author-3-Workplace-Name: Department of Accounting, Hasanuddin University, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

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Abstract: "Objective - This study aims to determine and analyze the effect of financial distress, leverage, free cash flow on earnings management. Methodology/Technique - The object of this research is all companies listed on the Indonesia Stock Exchange with an observation period of 2019. The sample determination uses the purposive sampling method and a total sample of 124 companies is obtained. The analysis technique used is multiple linear regression analysis. Findings - The results show that financial distress has no significant effect on earnings management. Leverage and free cash flow have a negative and significant effect on earnings management. Novelty - This research contributes to signalling theory, which is used by company managers who have better information about their company will be encouraged to convey this information to potential investors where this is intended so that companies can increase company value by sending signals through financial statements of companies listed on the IDX. Type of Paper - Empirical."

Keywords: Financial Distress; Leverage; Free Cash Flowandearnings Management. (search for similar items in EconPapers)
JEL-codes: G32 M21 M41 M42 (search for similar items in EconPapers)
Pages: 9
Date: 2021-12-31
New Economics Papers: this item is included in nep-cfn and nep-sea
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Citations: View citations in EconPapers (1)

Published in Accounting and Finance Review, Volume 6, Issue 3

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Persistent link: https://EconPapers.repec.org/RePEc:gtr:gatrjs:afr203

DOI: 10.35609/afr.2021.6.3(1)

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