Role of internal mechanisms of corporate governance systems on earnings management in Indonesia: A comprehensive analysis

This thesis explores the impact of internal mechanisms of corporate governance systems on earnings management in Indonesian listed companies, specifically in the industrial and service sectors. The study focuses on key governance variables including board size, board independence, board gender diversity, and managerial ownership. Using Random-effects Generalized Least Squares (GLS) analysis, the research examines the relationships between these governance factors and earnings management practices. The findings reveal that gender diversity and managerial ownership are significant in influencing earnings management. In the industrial sector, gender diversity positively correlates with earnings management, while in the service sector, it also shows a positive correlation. Managerial ownership shows a negative correlation with earnings management in the combined sector but is not significant in the individual sectors. These results underscore the importance of tailored governance reforms considering the specific characteristics of each sector. The study highlights the need for effective integration of diverse board members and the establishment of inclusive governance practices to mitigate earnings management.

KENT JORDAN TENDIAN Saarce Elsye Hatane (Advisor 1); Josua Tarigan (Examination Committee 1) Universitas Kristen Petra English Digital Theses Undergraduate Thesis Skripsi/Undergraduate Thesis Skripsi No. 32011072/AKT/2024; Kent jordan tendian (D12190165) EARNINGS MANAGEMENT

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