Family control, leverage, and quality of earnings: a study on manufacturing companies in Indonesia
Economic Annals-XXI: Volume 200, Issue (11-12), Pages: 33-40
Citation information:
Murni, S., Rahmawati, Widagdo, A. K., & Sudaryono, E. A. (2022). Family control, leverage, and quality of earnings: a study on manufacturing companies in Indonesia. Economic Annals-XXI, 200(11-12), 34-41. doi: https://doi.org/10.21003/ea.V200-06
Sri Murni
PhD (Economics),
Department of Accounting,
Faculty of Economics and Business,
Sebelas Maret University
Surakarta, 57126, Central Java, Indonesia
murni_dj2003@yahoo.com
ORCID ID: https://orcid.org/0000-0001-9796-6976
Rahmawati
PhD (Economics),
Professor,
Faculty of Economics and Business,
Sebelas Maret University
Surakarta, 57126, Central Java, Indonesia
rahmaw33@yahoo.com ;
fitria@mipa.uns.ac.id
ORCID ID: https://orcid.org/0000-0002-7951-8720
Ari Kuncara Widagdo
PhD (Economics),
Department of Accounting,
Faculty of Economics and Business,
Sebelas Maret University
Surakarta, 57126, Central Java, Indonesia
arikuncoro@fe.uns.ac.id
ORCID ID: https://orcid.org/0000-0001-6316-3913
Eko Arief Sudaryono
PhD (Economics),
Department of Accounting,
Faculty of Economics and Business,
Sebelas Maret University
Surakarta, 57126, Central Java, Indonesia
ekoarif_fe@staff.uns.ac.id
ORCID ID: https://orcid.org/0000-0002-9780-8641
Family control, leverage, and quality of earnings: a study on manufacturing companies in Indonesia
Abstract. Earnings quality can be influenced by family control through entrenchment effect and alignment effect. This study examines family control in improving earnings quality and leverage in moderating family control on earnings quality – the quantitative descriptive research method used as a research method. Manufacturing enterprises registered on the Indonesia Stock Exchange for 2017 and 2018 make up the research population. The data in this study are unbalanced. Secondary data was gathered from annual reports, prospectus reports, the Indonesian Capital Market Directory, and other sources for this study. The research topic is determined by applying the definition of a family business. The variables in this study include abnormal cash flows, abnormal production costs and, abnormal discretionary costs. They were testing the hypothesis using regression analysis (Ordinary Least Square/OLS).
The results showed that family control did not affect real earnings management. This shows that strong family control does not affect earnings quality. The leverage variable only moderates the effect of family control on abnormal cash flow from operations (REMCFO).
Keywords: Leverage; Earning; Manufacture Company; Business; Family Control
JEL Classification: A10; H24; H20
Acknowledgements and Funding: The authors would like to thank the Sebelas Maret University for academic support in completing this research.
Contribution: The authors have contributed equally to this work.
Data Availability Statement: All data will be available upon request.
DOI: https://doi.org/10.21003/ea.V200-06
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Received 2.07.2022
Received in revised form 23.07.2022
Accepted 26.09.2022
Available online 28.12.2022