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Thursday, April 29, 2010

Influence of Corporate Governance (Pengaruh Corporate Governance)


Pengaruh Corporate Governance Terhadap Manajemen Laba Di Industri Perbankan Indonesia

MARIHOT NASUTION
Alumni Fakultas Ekonomi Universitas Sebelas Maret

DODDY SETIAWAN
Fakultas Ekonomi Universitas Sebelas Maret

ABSTRACT

The aims of this research at examining the influence of corporate governance mechanisms, such as, board of commisioner composition and size, and audit committee existence on the earnings management practice in public bank companies listed in Jakarta Stock Exchange. The samples of this research is all of public banks companies existed in Indonesia in the year of 2000-2004 which were listed in Jakarta Stock Exchange. The research data were collected from public bank’s financial statement for the period of 2000 until 2004, from Indonesian Banking Directory published by Bank Indonesia from 2001 until 2005, and also from each company’s websites.

Purposive sampling method was used to determine research sample. From this method, we have collected 100 observations from 20 public banks companies/5 years. By using multiple regression analysis as the research method, the results shown that corporate governance mechanisms, namely, board of commisioner composition and size, and also audit committee existence influenced earnings management of public banks companies which have been detected by using specific accrual model from Beaver and Engel (1996).

These results mean those mechanisms done by the company have succeeded to minimize the earnings mangement practice. Therefore, based on these results we can conclude that corporate governance mechanisms have worked effectively to increase company’s performance.

Keywords: corporate governance, board of commisioner, audit committee, earnings management

*Simposium Nasional Akuntansi 10 Makassar


1. INTRODUCTION
Year 2001 recorded in the financial scandal involving the manipulation of public company financial statements by PT Lippo Tbk and PT Kimia Farma Tbk (Boediono, 2005). It is proved that the practice of manipulation of financial reports is still being done by corporate party despite being away from the crisis period 1997-1998. One cause of this condition is the lack of implementation of corporate governance. Evidence showed weak corporate governance practices in Indonesia led to deficiencies in corporate decision-making and actions (Alijoyo et al., 2004).

Corporate governance is the concept proposed to improve business performance through supervision or monitoring management performance and ensuring accountability of management to the stakeholders with a framework based on rules. The concept of corporate governance as proposed for the achievement of corporate management more transparent to all users of financial statements. If this concept is applied properly it is expected that economic growth will continue to rise in line with the transparency of corporate management a better and will benefit many parties.

*Simposium Nasional Akuntansi 10 Makassar
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