The Role Of The Board Of Commissioners In Earnings Management

Abstract

The company's management tries to make the company's performance look very good, which aims to attract
investor interest to invest, besides that management has the motive to get bigger compensation by showing
good company performance. To show good corporate performance then management will apply earnings
management that is by applying adjustments to financial statements. To prevent management from applying
earnings management to the detriment of investors, it is necessary to supervise the behavior of management in
making the financial statements by applying corporate governance, one of the corporate governance
mechanisms is the company must have the board of commissioner responsible for overseeing the company's
management activities in managing the company.
An indicator of the board of commissioners used is the composition of the independent commissioner, the
number of board of commissioner's meeting, the board of commissioner's education and for the measurement
of earnings management using Modified Jones Model. In this research, the data used is financial data of mining
company sub-sector that listed in Indonesia Stock Exchange year 2012 - 2014.
The results of this study conclude that the composition of the independent board of commissioners can reduce
the occurrence of earnings management, the number of meetings involving the board of commissioners can
prevent the occurrence of earnings management and education background board of commissioners cannot
prevent the occurrence of earnings management.
Suggestions for further research, for the educational background of the board of commissioners, should use a
percentage of the total members of the board of commissioners who have the background of financial
education.