Factors Affecting the Earnings Management of State-Owned Enterprises in 2010-2019

ABSTRACT : Earnings is one indicator used to estimate management performance. Earnings information isoften the target of management’s opportunistic manipulation actions to maximize satisfaction. The behavior ofmanagement to manage earnings according to their wishes is known as earnings management. This studymeasures earnings management with the value of Dechow’s discretionary accrual model. This study aims toobtain empirical evidence of the effect of information asymmetry, profitability, and the employee stockownership program (ESOP) on earnings management. This research was conducted at state-owned enterpriseslisted on the Indonesia Stock Exchange in 2010-2019. The population in this research is 12 state-ownedenterprises. Determination of samples using purposive sampling technique. Data analysis using panel dataregression analysis. The results of this study indicate that information asymmetry and the employee stockownership program have no effect on earnings management, while profitability has a positive effect on earningsmanagement. The results of this study can theoretically confirm Agency Theory which explains the interestsbetween agents and principles as the cause of earnings management actions as well as Positive AccountingTheory which explains the motivation of managers who practice earnings management.

Keywords: earnings management, information asymmetry, profitability, ESOP