Factors that have an impact on improving profit management of manufacturing companies

Abstract

This study aims to examine the effect of good corporate governance and accounting conservatism on earnings management in manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2022. Using a quantitative approach and multiple linear regression analysis, the research analyzes data from five manufacturing companies, resulting in 15 samples from financial reports over three years. The findings reveal that good corporate governance has a positive and significant impact on earnings management, indicating that better corporate governance improves earnings management practices. However, the study shows that accounting conservatism has no significant effect on earnings management when analyzed independently. Despite this, the combined effect of good corporate governance and accounting conservatism on earnings management is found to be positive and significant. This suggests that while accounting conservatism alone does not influence earnings management, it contributes positively when combined with strong corporate governance practices. The implications of this research emphasize the importance of robust corporate governance for enhancing earnings management, while accounting conservatism helps present more accurate financial statements. Manufacturing companies are encouraged to strengthen internal controls through effective corporate governance and conservative accounting practices to boost stakeholder confidence and ensure sustainability.