The Effect of International Financial Reporting Standars on the Real Earnings Management and Internal Control Structure as a Moderating Variable

Theresia Dwi Hastuti, Imam Ghozali and Etna Nur Yuyetta
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Theresia Dwi Hastuti: Faculty of Economics and Business, Department of Accounting, Soegijapranata University Semarang, Indonesia
Imam Ghozali: Department of Accounting, Faculty of Economics and Business, Diponegoro Universtiy, No. 17, Jl. Erlangga Tengah, Semarang, Indonesia,
Etna Nur Yuyetta: Faculty of Economics and Business, Diponegoro Universtiy, No. 17, Jl. Erlangga Tengah, Semarang, Indonesia.

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 4, 1807-1814

Abstract: Earnings management has become a widely known phenomenon towards managing reported earning in order to fulfill targets. Scott (1997) defines earnings management as a management choice upon accounting policy, or a real activity that affects earnings as such that multiple objectives of the specific earnings reporting can be obtained. The perspective of financial statement contends that a manager uses earnings management to match financial analyst's forecast with the objective of avoiding perception and negative reaction, which in turn brings impact on stock price. This study aimed to examine the effect of International Financial Reporting Standards (IFRS)-based accounting standard on the real earnings management (REM) moderated by internal control structure. Samples for the study were manufacture companies listed in the Indonesian Stock Exchange 2010-2014. The study found that adoption of the IFRS-based accounting standard had a positive effect on the REM and good corporate governance proxied by internal control structure weaken the positive effect of the IFRS-based accounting standard adoption on the REM.

Keywords: Real Earnings Management; International Financial Reporting Standards; Good Corporate Governance; Internal Control Structure (search for similar items in EconPapers)
JEL-codes: F38 M4 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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