THE ROLE OF INDEPENDENT DIRECTORS AND INDEPENDENT COMMISSIONERS IN PREVENTING EARNINGS MANAGEMENT

Abstract

Investors, banks and the government have an interest in the information reported by the company to make business decisions, but the company has the ability to make financial statements in accordance with the purposes of the manager by practicing earnings management. To prevent the occurrence of earnings management practices in the company, the role of independent directors and independent commissioners is needed to oversee the performance of managers in managing the company which has an impact on company performance.
This study uses a sample of 17 trade sub-sector companies listed on the Indonesia Stock Exchange in 2014 - 2015 so that this study uses the panel data method. The purpose of this study was to determine the effect of independent directors and independent commissioners on earnings management practices in the company.
The results of this study independent directors have a significant positive effect on earnings management and independent commissioners have no significant negative direction on earnings management. It is recommended for companies and regulators to add to the composition of independent directors and independent commissioners in the company
Keywords : Earnings management, independent director, independent commissioner