CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE AS DETERMINANTS OF EARNINGS MANAGEMENT: EMPIRICAL EVIDENCE FROM INDONESIA

Abstract

Earnings management continues to be a pervasive challenge in corporate reporting, frequently influenced by conflicts of interest between managers and shareholders. This study examines the impact of profitability, firm size, leverage, managerial ownership, and the existence of audit committees on earnings management practices in Indonesian consumer goods companies listed on the Indonesia Stock Exchange from 2020 to 2023. Utilizing a sample of 124 firm-year observations and multiple regression analysis, the results indicate that profitability and audit committees significantly constrain earnings management, whereas firm size, leverage, and managerial ownership exhibit no significant impact. These findings underscore the significance of robust governance frameworks—especially efficient audit committees—in preserving financial transparency. This study adds to the larger conversation about how governance structures and financial performance affect how companies report by  giving real-world examples from an emerging market.