Vinola Herawaty
Dosen Universitas Trisakti
dan mahasiswa Pasca Sarjana Program Ilmu Akuntansi Universitas Indonesia

The objective of the empirical studi is to examine the role of Corporat Governance Practises as a variabel that moderates the effect of Earnings Management to the value of the firm and to answer the effectinessness of Corporate Governance Practises in controlling the company’s management’s ability with Earnings Management that affect the Firm Value. Four proxies used for Corporate Governance Practices are Manajerial Ownership, Institusional Ownership, Outside Independent Director, Audit Quality. Company size is use as a control variable. The value of the firm is measured by using proxy Tobin’s Q Model. The analysis method used is Ordinary Least Square, t-test and F-test. The sample of this empirical study is the company that listed in Jakarta Stock Exchange in the period of 2004-2006.

The result gives the evidence that Corporate Governace Practises that have a signifikan impact to the value the firm are Outside Independent Director and Institusional Ownership, in the model regression with moderating variable. It also indicates that Outside Independent Director, Audit Quality and Institusional Ownership are moderating variables of the relationship between Earnings Managementt and the value of the firm, but not the Manajerial Ownership. Thus, Earnings Management can be minimized with the monitoring mechanism i.e. (1) Outside Independent Director that can monitor the management of the company in aligning the interest of principal and agent, (2) Institusional Ownership shareholders – the sophitisticed investor that also monitor the management to decrease the motivation of management to manipulate Earnings and (3) Audit Quality with the role of auditors to give the credibility of the reported financial statement by management. The result also shows that Manajerial Ownership does not represent the moderating variable of the realtionship between Earnings Management and Firm Value, it proves that the role of manajerial ownership is not significant to minimize the management’s ability to manipulate Earnings that affects the Firm Value

Keywords: Corporate Governance, Earnings Management, Manajerial Ownership, Outside Independent Director, Institusional Ownership, dan Audit Quality..


One of the ways used by dala management processes of financial statements that may affect the rate of profit shown is Earnings Management, which is expected to increase the value of the Company at any given moment. Earnings Management objective is to improve the welfare of a particular party in the long run although there is no difference in cumulative profit companies with earnings that can be identified as an advantage (Fischer and Rosenzweirg, 1995), Scot 1997: 294. Earnings Management by company management will increase firm value (Tobin’s Q) and then going down (Morck, Scheifer & Vishny (1988). L

Earnings Management can cause problems agency problem (agency cost) that is triggered from the separation of roles or differences of interest between shareholders (principal) with the manager / management company (agent). Management as the manager of the company have information about the company more and more advance than the shareholders resulting in asymmetry of information that enables management accounting practice with an orientation on earnings to achieve a certain performance. Agency conflict that resulted in opportunistic earnings management that will result in the reported apparent, so that will cause the company’s value is reduced in the future,


Jurnal Simposium Nasional Akuntasi XI (SNA 11)
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