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Source: Journal Citation ReportsTM from ClarivateTM 2022

Entrepreneurship and Sustainability Issues Open access
Journal Impact FactorTM (2022) 1.7
Journal Citation IndicatorTM (2022) 0.42
Received: 2020-02-10  |  Accepted: 2020-05-25  |  Published: 2020-06-30

Title

Corporate governance mechanism and financial performance: role of earnings management


Abstract

The mechanism of good corporate governance is used to prevent the management of the company from engaging in unethical actions, such as the earnings management. It can be an effective way to control management. This study aims to analyse corporate governance, consisting of the size of the board of commissioners, the size of the sharia supervisory board, and the audit committee on financial performance, measured as return on assets (ROA), with earnings management as the mediating variable. The sample used for the study consists of nine Indonesian shariah banks and the period of analysis is 2013-2017. The results of the path analysis show that the size of the board of commissioners has a negative effect on the company’s ROA. The study also finds that the size of the sharia supervisory board, audit committee and earnings management do not have significant effects on financial performance. Earnings management has a positive mediating role on the relationship between the board of commissioners, the audit committee and ROA. This finding indicates that the existence of the board of commissioners is effective in supervising the management. Thus the mechanism corporate governance can limit the managers’ discretionary behavior and prevent earnings management.


Keywords

board of commissioners, sharia supervisory board, audit committee, financial performance, earnings management


JEL classifications

M41 , M48 , M49


URI

http://jssidoi.org/jesi/article/593


DOI


Pages

3395-3409


Funding

The research was conducted with the support of the Universitas Riau, Indonesia

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Savitri, Enni
University of Riau, Pekanbaru, Indonesia https://unri.ac.id
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Andreas, Andreas
University of Riau, Pekanbaru, Indonesia https://unri.ac.id
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Syahza, Almasdi
University of Riau, Pekanbaru, Indonesia https://unri.ac.id
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Gumanti, Tatang Ary
University Bhayangkara Jakarta Raya, South Jakarta, Indonesia https://ubharajaya.ac.id
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Abdullah, Nik Herda Nik
Taylor's University, Subang Jaya, Malaysia https://taylors.edu.my
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Journal title

Entrepreneurship and Sustainability Issues

Volume

7


Number

4


Issue date

June 2020


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 4486  |  PDF downloads: 1523

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