| Issue |
SHS Web Conf.
Volume 34, 2017
The 17th Annual Conference of the Asian Academic Accounting Association (2016 FourA Conference)
|
|
|---|---|---|
| Article Number | 04008 | |
| Number of page(s) | 7 | |
| Section | Corporate Governance | |
| DOI | https://doi.org/10.1051/shsconf/20173404008 | |
| Published online | 14 February 2017 | |
The Association between Related Party Transactions and Real Earnings Management: Internal Governance Mechanism as Moderating Variables
Accounting Department, Business School, Universitas Pelita Harapan, Tangerang, Indonesia
* Corresponding author: antonius.herusetya@uph.edu
We investigate the association between related party transactions (RPT) and real earnings management (REM). We also investigate the role of internal governance mechanism through the effectiveness of board of commissioner and audit committee in mitigating the association between RPT and REM. Our research sample consists of 386 firm-years of manufacturing firms listed in Indonesian Stock Exchange (IDX) from year 2010 - 2014. Using linear regression, we find evidence that RPT has positive association with REM, only when the firm has higher RPT but not in the lower RPT. We find a contradictory result that board of commissioners strengthen the positive association between RPT and REM. Finally, we find evidence that the effectiveness of audit committees weaken the positive association between RPT and REM, both in full sample and in high RPT sample.
Key words: related party transactions / real earnings management / board of commissioner / audit committee / corporate governance
© The Authors, published by EDP Sciences, 2017
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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