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AKPM- 04
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INVESTIGASI MOTIVASI DAN STRATEGI MANAJEMEN LABA PADA PERUSAHAAN PUBLIK DI INDONESIA

KOMARUDIN ACHMAD

IMAM SUBEKTI

SARI ATMINI

Universitas Brawijaya Malang

[Simposium Nasional Akuntansi 10 Makassar]

ABSTRACT

This study investigates the existence of earnings management motivations and strategies. Based on ordinary least square regression, this study indicates that debt covenant and political cost motivations affect earnings management. However, bonus plan motivation and accounting method choice strategy do not affect earnings management. Investigation on earnings management practices explains that bonus plan motivation affect income increasing, not income decreasing.

This study finds that the managers of public firms in Indonesia do not use accounting method choices as earnings management strategy. Some of them choose to use a little of accruals accounting flexibility and prefer both GAAP violations and intercompany transactions strategies. This study identifies that the motivations of debt covenant, political cost and owners’ wealth as well as the strategy of accruals accounting flexibility are earnings management practices with global value. Otherwise, earnings management practices with local value consist of motivation caused by both debt restructuring and going concern constraint and strategy through GAAP violations and intercompany transactions.

Key Words: Earnings management, Motivation, Bonus plan, Debt covenant, Political cost, Owners’ wealth, Debt restructuring, Going concern, Strategy, Accounting method choice, Accruals accounting flexibility, GAAP violations, Intercompany transactions, Global value, Local value

* The names of companies and related parties has been modified for the purposes of this research. We appreciates the various parties who have been providing input to this research.

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The financial statements have been prepared on the accrual basis of accounting (accruals accounting). Accrual accounting has the advantage that the company’s earnings and its components measured by accrual accounting generally provides a better indication about the economic performance of companies than the information generated from the aspects of current receipts and payments (FASB 1978). Accrual accounting also has weaknesses. Wild et al. (2003) criticized that accrual accounting is not perfect and the rules that obscure the financial report which aims to provide cash flow information and company capabilities in generating cash. Vagueness of this information due to accrual accounting is complicated and vulnerable to manipulation. This vulnerability is called management earnings (earnings management).

The presence of motivation and opportunities as incentives for managers to manage earnings. According to Scott (2000), motivation for earnings management include bonus plans, debt covenants, and political cost. Managers are motivated to manage earnings to achieve performance targets and bonus compensation, minimize the possibility of debt covenant violations, and minimize the political cost because of government intervention and the parliament.

* Simposium Nasional Akuntansi 10 Makassar

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