Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company
Real Earnings Management (REM) and financial success may have different relationships depending on how managers act. Bonus mechanisms are a significant factor that influences management behavior. The study seeks to examine the impact of bonus systems on the correlation between financial performance...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2024-03-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19819/IMFI_2024_01_Akbar.pdf |
| _version_ | 1797246528483491840 |
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| author | Taufiq Akbar Ridarmelli Inung Wijayanti Septo Pramesworo Hedwigis Esti Riwayati |
| author_facet | Taufiq Akbar Ridarmelli Inung Wijayanti Septo Pramesworo Hedwigis Esti Riwayati |
| author_sort | Taufiq Akbar |
| collection | DOAJ |
| description | Real Earnings Management (REM) and financial success may have different relationships depending on how managers act. Bonus mechanisms are a significant factor that influences management behavior. The study seeks to examine the impact of bonus systems on the correlation between financial performance and REM practices in manufacturing companies in Indonesia. Moderated Regression Analysis (MRA) is employed to evaluate the influence of bonus mechanisms in moderating the association of financial performance on REM. The technique of purposive sampling was used to pick the sample. The study utilized data from manufacturing firms listed on the Indonesian Stock Exchange from 2017 to 2021, including a total of 400 observed data points. The research findings demonstrate that sales growth is the sole factor that significantly influences REM in manufacturing organizations, as indicated by a p-value below 10%. Other financial performance factors, on the other hand, with p-values for each variable above 10%, have not been shown to have a significant impact on REM. These factors include ROA, leverage, operating cash flow, and cash. The findings also demonstrate that, with a p-value for each variable above 10%, the bonus mechanism is a variable that modifies the effect of all financial performance variables on REM. |
| first_indexed | 2024-04-24T19:44:14Z |
| format | Article |
| id | doaj.art-8491bc9e224d459a98820345c9e3c762 |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-04-24T19:44:14Z |
| publishDate | 2024-03-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-8491bc9e224d459a98820345c9e3c7622024-03-25T09:00:30ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582024-03-0121143144310.21511/imfi.21(1).2024.3319819Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing companyTaufiq Akbar0https://orcid.org/0000-0003-3945-5793Ridarmelli1https://orcid.org/0000-0002-5619-3580Inung Wijayanti2https://orcid.org/0009-0008-8860-4795Septo Pramesworo3https://orcid.org/0009-0006-4177-1241Hedwigis Esti Riwayati4https://orcid.org/0000-0001-8951-6334Master, Senior Scientific Associate, Faculty of Economics and Business, Accounting Department, Perbanas Institute, IndonesiaMaster, Senior Scientific Associate, Faculty of Economics and Business, Accounting Department, Perbanas Institute, IndonesiaMaster, Associate Professor, Faculty of Economics and Business, Accounting Department, Perbanas Institute, IndonesiaMaster, Senior Scientific Associate, Faculty of Economics and Business, Management Department, Perbanas Institute, IndonesiaDoctor, Associate Professor, Faculty of Economics and Business, Management Department, Perbanas Institute, IndonesiaReal Earnings Management (REM) and financial success may have different relationships depending on how managers act. Bonus mechanisms are a significant factor that influences management behavior. The study seeks to examine the impact of bonus systems on the correlation between financial performance and REM practices in manufacturing companies in Indonesia. Moderated Regression Analysis (MRA) is employed to evaluate the influence of bonus mechanisms in moderating the association of financial performance on REM. The technique of purposive sampling was used to pick the sample. The study utilized data from manufacturing firms listed on the Indonesian Stock Exchange from 2017 to 2021, including a total of 400 observed data points. The research findings demonstrate that sales growth is the sole factor that significantly influences REM in manufacturing organizations, as indicated by a p-value below 10%. Other financial performance factors, on the other hand, with p-values for each variable above 10%, have not been shown to have a significant impact on REM. These factors include ROA, leverage, operating cash flow, and cash. The findings also demonstrate that, with a p-value for each variable above 10%, the bonus mechanism is a variable that modifies the effect of all financial performance variables on REM.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19819/IMFI_2024_01_Akbar.pdfbehaviorcompensationgovernanceincentivesmeasurementoperation |
| spellingShingle | Taufiq Akbar Ridarmelli Inung Wijayanti Septo Pramesworo Hedwigis Esti Riwayati Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company Investment Management & Financial Innovations behavior compensation governance incentives measurement operation |
| title | Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company |
| title_full | Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company |
| title_fullStr | Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company |
| title_full_unstemmed | Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company |
| title_short | Examining the bonus mechanisms’ role in real earnings management dynamics in an Indonesian manufacturing company |
| title_sort | examining the bonus mechanisms role in real earnings management dynamics in an indonesian manufacturing company |
| topic | behavior compensation governance incentives measurement operation |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19819/IMFI_2024_01_Akbar.pdf |
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