Effect of Family Control on Earnings Management: The Role of Leverage
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
2.1. Agency Theory
2.2. Family Control and Earnings Management
2.3. Family Control, Leverage, and Earnings Management
3. Materials and Methods
3.1. Data and Sample
3.2. Measurement and Operationalization Variables
3.2.1. Dependent Variable
- Calculate total accrual (TA) using the following formula.
- Determining TA is estimated by Ordinary Least Square:
- Determining non-discretionary accruals (NDA) using the regression coefficient in Formula 2 with the following formula:
- Determining discretionary accruals (DA) as a measure of earnings management with the following formula:
3.2.2. Independent Variable
3.2.3. Moderating Variable
3.2.4. Control Variable
3.3. Research Model
4. Results
4.1. Descriptive Statistics
4.2. Analysis and Discussion
5. Robustness Test
5.1. Family Shareholding and Earnings Management
5.2. Family Directors and Earnings Management
Research Variable | Coefficient | Standard Error | t-Statistic | Prob |
---|---|---|---|---|
(Constant) | −0.4245 | 0.1778 | −2.3872 | 0.0175 |
FDerector | 0.0744 | 0.0398 | 1.8677 | 0.0627 * |
Lev | 0.0511 | 0.0200 | 2.5469 | 0.0113 ** |
FDirector*Lev | −0.1478 | 0.0697 | −2.1198 | 0.0348 ** |
ROA | −0.1301 | 0.0736 | −1.7667 | 0.0782 * |
Size | 0.0309 | 0.0120 | 2.5842 | 0.0102 ** |
Growth | 0.0053 | 0.0097 | 0.5443 | 0.5866 |
Adj R2 | 0.2065 | |||
F Statistic | 2.2225 | |||
Prob (F Statistic) | 0.0000 |
5.3. Family Members on the Board of Commissioners and Earnings Management
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Variable | N | Minimum | Maximum | Mean | SD |
---|---|---|---|---|---|
EM | 419 | 0.0002 | 0.5500 | 0.0516 | 0.0550 |
FamCtrl | 419 | 0.0000 | 2.0000 | 1.3699 | 0.7821 |
Lev | 419 | 0.0707 | 6.5042 | 0.5226 | 0.4036 |
FamCtrl*Lev | 419 | 0.0000 | 13.008 | 0.6966 | 0.7865 |
ROA | 419 | −0.2201 | 0.2284 | 0.0329 | 0.0656 |
Size | 419 | 11.4001 | 18.658 | 14.695 | 1.5466 |
Growth | 419 | −0.5000 | 4.7039 | 0.0568 | 0.2909 |
Research Variable | Coefficient | Standard Error | t-Statistic | Prob |
---|---|---|---|---|
(Constant) | −0.4180 | 0.1753 | −2.3847 | 0.0177 |
FamCtrl | 0.0254 | 0.0096 | 2.6391 | 0.0087 *** |
Lev | 0.0752 | 0.0256 | 2.9385 | 0.0035 *** |
FarmCtrl*Lev | −0.0350 | 0.0134 | −2.6177 | 0.0093 *** |
ROA | −0.1291 | 0.0733 | −1.7612 | 0.0791* |
Size | 0.0289 | 0.0118 | 2.4477 | 0.0149 ** |
Growth | 0.0017 | 0.0097 | 0.1770 | 0.8596 |
Adj R2 | 0.2154 | |||
F Statistic | 2.2896 | |||
Prob (F Statistic) | 0.0000 |
Research Variable | Coefficient | Standard Error | t-Statistic | Prob |
---|---|---|---|---|
(Constant) | −0.4893 | 0.1797 | −2.7228 | 0.0068 |
FOwnership | 0.0011 | 0.0004 | 2.5414 | 0.0115 ** |
Lev | 0.1212 | 0.0351 | 3.4512 | 0.0006 *** |
FOwnership*Lev | −0.0020 | 0.0006 | −3.1862 | 0.0016 *** |
ROA | −0.0966 | 0.0740 | −1.3042 | 0.1931 |
Size | 0.0327 | 0.0121 | 2.6932 | 0.0074 *** |
Growth | 0.0036 | 0.0096 | 0.3706 | 0.7112 |
Adj R2 | 0.220206 | |||
F Statistic | 2.326279 | |||
Prob (F Statistic) | 0.000000 |
Research Variable | Coefficient | Standard Error | t-Statistic | Prob |
---|---|---|---|---|
(Constant) | −0.3987 | 0.1739 | −2.2929 | 0.0225 |
FCommissioner | 0.0640 | 0.0306 | 2.0885 | 0.0375 ** |
Lev | 0.0701 | 0.0249 | 2.8162 | 0.0052 *** |
FOwnership*Lev | −0.0976 | 0.0393 | −2.4810 | 0.0136 ** |
ROA | −0.1173 | 0.0741 | −1.5841 | 0.1141 |
Size | 0.0282 | 0.0117 | 2.4074 | 0.0166 ** |
Growth | 0.0004 | 0.0097 | 0.0400 | 0.9681 |
Adj R2 | 0.211433 | |||
F Statistic | 2.259274 | |||
Prob (F Statistic) | 0.000000 |
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Murni, S.; Rahmawati, R.; Widagdo, A.K.; Sudaryono, E.A.; Setiawan, D. Effect of Family Control on Earnings Management: The Role of Leverage. Risks 2023, 11, 28. https://doi.org/10.3390/risks11020028
Murni S, Rahmawati R, Widagdo AK, Sudaryono EA, Setiawan D. Effect of Family Control on Earnings Management: The Role of Leverage. Risks. 2023; 11(2):28. https://doi.org/10.3390/risks11020028
Chicago/Turabian StyleMurni, Sri, Rahmawati Rahmawati, Ari Kuncara Widagdo, Eko Arief Sudaryono, and Doddy Setiawan. 2023. "Effect of Family Control on Earnings Management: The Role of Leverage" Risks 11, no. 2: 28. https://doi.org/10.3390/risks11020028
APA StyleMurni, S., Rahmawati, R., Widagdo, A. K., Sudaryono, E. A., & Setiawan, D. (2023). Effect of Family Control on Earnings Management: The Role of Leverage. Risks, 11(2), 28. https://doi.org/10.3390/risks11020028