| Summary: | The pros and cons of previous study about the relationship between
corporate governance and earnings management are being the background of this
study to put corporate governance no longer as an independent variable but as
moderating variable. The objective of the study is to find out empirical evidence of
the effectiveness of corporate governance to reduce the impact of earnings
management on corporate value.
Corporate governance is measured by an index formed by the existence of
its components, such as managerial ownership, institutional ownership,
independent commissioner, independent nomination committee, audit committee
competences, and remuneration committee. Earnings management is proxied by
discretionary accruals, while the corporate value is measured by Tobin�s Q. This
study is also using corporate size as a control variable which is measured by the
natural logarithm of market value of corporate equity. The data were taken from
the financial statement and annual reports of manufacturing companies listed on
The Indonesian Stock Exchange (IDX) in the period 2007-2011, was not delisting
on that period, presented in rupiah, and can be downloaded on companies official
website and The Indonesian Stock Exchange�s website.
From the data obtained by 27 companies in the five year period showed
the result of the study, that the existence of corporate governance as moderating
variable is able to change the negative effect of earnings management on
corporate value to be a positive effect. The result supports the hypothesis that
corporate governance reduces the impact of earnings management on corporate
value.
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