Earnings Management and Sustainability Reporting Disclosure: Some Insights from Indonesia
Abstract
:1. Introduction
2. Literature Review and Hypothesis Development
3. Research Method
3.1. Data, Population, and Sample
3.2. Variable Operationalisation
3.3. Empirical Model
+ β6 BSIZEi,t + β7 INDBOCi,t + β8 BIG4i,t + β9 PPEi,t + β10 RNDi,t + β11 AEM_DCi,t + β12 LNAGEi,t
+ β13 GRI Fixed Effecti,t + β14 Industry Fixed Effecti,t + β15 Year Fixed Effecti,t + ε
3.4. Research Steps and Methodological
4. Empirical Result and Discussion
4.1. Statistics Descriptive and Univariate Analyses
4.2. Main Result
4.3. Robustness and Endogeneity Test
4.4. Heckman’s (1979) Two-Stage Least Square Method
+ β6 INDBOCi,t + β7 BIG4i,t + β8 PPEi,t + β9 RNDi,t + β10 AEM_DCi,t + β11 LNAGEi,t
+ θ1−n GRI Fixed Effecti,t + δ1−n Industry Fixed Effecti,t + ή1−n Year Fixed Effecti,t + ε
+ β6 INDBOCi,t + β7 BIG4i,t + β8 PPEi,t + β9 RNDi,t + β10 AEM_DCi,t + β11 LNAGEi,t
+ θ1−n GRI Fixed Effecti,t + δ1−n Industry Fixed Effecti,t + ή1−n Year Fixed Effecti,t + ε
4.5. Propensity Score Matching (PSM)
4.6. Lagged Dependent Analyses
4.7. Discussion
5. Conclusions
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
References
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Panel A: Sample Distribution based on Industry Classifications | ||
Industry Classification | N | Percent |
(SIC 0) Agriculture, forestry and fisheries | 73 | 11.49 |
(SIC 1) Mining | 164 | 25.83 |
(SIC 2) Construction industries | 123 | 19.37 |
(SIC 3) Manufacturing | 92 | 14.49 |
(SIC 4) Wholesale and retail trade | 109 | 17.16 |
(SIC 5) Service industries | 54 | 8.51 |
(SIC 7) Health, legal, educational services, and consulting | 54 | 8.51 |
Total | 635 | 100.00 |
Panel B: Sample Distribution based on Year | ||
Year | N | Percent |
2010 | 51 | 8.06 |
2011 | 54 | 8.80 |
2012 | 55 | 9.04 |
2013 | 54 | 8.80 |
2014 | 48 | 7.33 |
2015 | 55 | 9.04 |
2016 | 44 | 6.36 |
2017 | 56 | 9.29 |
2018 | 60 | 10.26 |
2019 | 52 | 8.31 |
2020 | 54 | 8.81 |
2021 | 42 | 5.87 |
Total | 635 | 100.00 |
Mean | Median | Minimum | Maximum | |
---|---|---|---|---|
SR | 0.407 | 0.340 | 0.093 | 1.000 |
AEM_DEC | 0.067 | 0.052 | 0.001 | 1.303 |
AEM_MCN | 0.065 | 0.050 | 0.000 | 1.299 |
FSIZE | 30.359 | 30.410 | 25.535 | 33.474 |
ROA | 6.409 | 4.680 | −56.730 | 52.660 |
LEV | 0.546 | 0.548 | 0.133 | 1.923 |
RND | 0.002 | 0.000 | 0.000 | 0.110 |
PPE | 0.427 | 0.421 | 0.009 | 0.851 |
BSIZE | 11.587 | 12.000 | 4.000 | 23.000 |
INDBOC | 2.022 | 2.000 | 0.000 | 6.000 |
BIG4 | 0.758 | 1.000 | 0.000 | 1.000 |
[1] | [2] | [3] | [4] | [5] | [6] | [7] | [8] | [9] | [10] | [11] | |
---|---|---|---|---|---|---|---|---|---|---|---|
[1] SR | 1.000 | ||||||||||
[2] AEM_DEC | −0.022 | 1.000 | |||||||||
(0.653) | |||||||||||
[3] AEM_MCN | −0.018 | 0.984 *** | 1.000 | ||||||||
(0.718) | (0.000) | ||||||||||
[4] FSIZE | 0.227 *** | −0.032 | −0.043 | 1.000 | |||||||
(0.000) | (0.522) | (0.383) | |||||||||
[5] ROA | 0.169 *** | −0.075 | −0.092 * | −0.073 | 1.000 | ||||||
(0.001) | (0.131) | (0.063) | (0.138) | ||||||||
[6] LEV | −0.186 *** | 0.290 *** | 0.299 *** | 0.023 | −0.416 *** | 1.000 | |||||
(0.000) | (0.000) | (0.000) | (0.637) | (0.000) | |||||||
[7] RND | −0.004 | −0.047 | −0.047 | −0.024 | 0.417 *** | −0.015 | 1.000 | ||||
(0.934) | (0.342) | (0.349) | (0.627) | (0.000) | (0.762) | ||||||
[8] PPE | 0.099 ** | −0.111 ** | −0.142 *** | 0.134 *** | 0.060 | −0.202 *** | 0.021 | 1.000 | |||
(0.046) | (0.025) | (0.004) | (0.007) | (0.229) | (0.000) | (0.666) | |||||
[9] BSIZE | 0.280 *** | −0.129 *** | −0.141 *** | 0.614 *** | 0.228 *** | −0.227 *** | 0.119 ** | 0.203 *** | 1.000 | ||
(0.000) | (0.009) | (0.004) | (0.000) | (0.000) | (0.000) | (0.016) | (0.000) | ||||
[10] INDBOC | 0.107 ** | −0.111 ** | −0.116 ** | 0.353 *** | 0.029 | −0.167 *** | −0.245 *** | 0.183 *** | 0.545 *** | 1.000 | |
(0.031) | (0.025) | (0.019) | (0.000) | (0.563) | (0.001) | (0.000) | (0.000) | (0.000) | |||
[11] BIG4 | 0.212 *** | −0.211 *** | −0.228 *** | 0.268 *** | 0.333 *** | −0.403 *** | 0.100 ** | 0.372 *** | 0.326 *** | 0.138 *** | 1.000 |
(0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.000) | (0.043) | (0.000) | (0.000) | (0.005) |
(1) | (2) | (3) | |
---|---|---|---|
SR | SR | SR | |
AEM_DEC | 0.152 ** | ||
(2.02) | |||
AEM_MCN | 0.172 ** | ||
(2.34) | |||
FSIZE | 0.018 * | 0.018 * | 0.018 * |
(1.82) | (1.75) | (1.78) | |
ROA | 0.002 ** | 0.002 ** | 0.002 ** |
(2.12) | (2.03) | (2.04) | |
LEV | −0.062 | −0.080 * | −0.082 * |
(−1.32) | (−1.70) | (−1.75) | |
BSIZE | 0.012 *** | 0.013 *** | 0.013 *** |
(2.60) | (2.70) | (2.71) | |
INDBOC | −0.026 ** | −0.025 ** | −0.025 ** |
(−2.09) | (−2.01) | (−2.00) | |
BIG4 | 0.033 | 0.036 | 0.036 |
(1.32) | (1.44) | (1.45) | |
PPE | 0.090 * | 0.090 * | 0.093 * |
(1.74) | (1.75) | (1.81) | |
RND | −0.935 | −0.799 | −0.808 |
(−1.06) | (−0.91) | (−0.92) | |
LNAGE | 0.058 ** | 0.056 ** | 0.056 ** |
(2.16) | (2.10) | (2.10) | |
_cons | −0.357 | −0.341 | −0.350 |
(−1.28) | (−1.23) | (−1.28) | |
Year FE | Yes | Yes | Yes |
Industry FE | Yes | Yes | Yes |
GRI FE | Yes | Yes | Yes |
F | 8.993 | 8.702 | 8.785 |
r2_a | 0.295 | 0.297 | 0.298 |
N | 635 | 635 | 635 |
1st Stage | 2nd Stage | |||
---|---|---|---|---|
DUM_DEC | DUM_MCN | SR | SR | |
AVE_DEC | 6.778 *** | |||
(2.64) | ||||
AVE_MCN | 4.888 * | |||
(1.91) | ||||
LAG_CSR | 0.437 | 0.427 | ||
(1.25) | (1.21) | |||
AEM_DEC | 0.136 * | |||
(1.69) | ||||
AEM_MCN | 0.142 * | |||
(1.76) | ||||
MILLS | −0.034 | −0.018 | ||
(−0.50) | (−0.19) | |||
FSIZE | −0.104 | −0.209 *** | 0.018 | 0.018 |
(−1.35) | (−2.73) | (1.58) | (1.18) | |
ROA | −0.011 | −0.009 | 0.002 * | 0.003 * |
(−1.35) | (−1.13) | (1.92) | (1.89) | |
LEV | 0.271 | 0.309 | −0.084 * | −0.077 |
(0.74) | (0.84) | (−1.73) | (−1.45) | |
PPE | −0.719 * | −1.371 *** | 0.092 | 0.109 |
(−1.85) | (−3.50) | (1.50) | (1.16) | |
RND | −14.733 ** | −5.029 | −1.738 | −0.612 |
(−2.07) | (−0.70) | (−1.50) | (−0.61) | |
BSIZE | 0.062 | 0.051 | 0.014 ** | 0.013 ** |
(1.55) | (1.34) | (2.30) | (2.17) | |
INDBOC | −0.011 | 0.093 | −0.036 *** | −0.023 * |
(−0.11) | (1.01) | (−2.91) | (−1.81) | |
BIG4 | 0.116 | 0.098 | 0.049 * | 0.035 |
(0.52) | (0.43) | (1.82) | (1.17) | |
LNAGE | 0.209 | 0.139 | 0.078 ** | 0.058 * |
(1.16) | (0.76) | (2.58) | (1.86) | |
_cons | 1.668 | 5.498 ** | −0.370 | −0.371 |
(0.75) | (2.44) | (−1.24) | (−1.00) | |
Year FE | Yes | Yes | Yes | Yes |
Industry FE | Yes | Yes | Yes | Yes |
GRI FE | Yes | Yes | Yes | Yes |
r2_p | 0.138 | 0.135 | ||
r2_a | 0.305 | 0.296 | ||
N | 635 | 635 | 635 | 635 |
(1) | (2) | |
---|---|---|
SR | SR | |
AEM_DEC | 0.203 ** | |
(2.12) | ||
AEM_MCN | 0.170 | |
(1.62) | ||
FSIZE | 0.027 * | 0.032 * |
(1.67) | (1.94) | |
ROA | 0.002 | 0.007 ** |
(1.14) | (2.36) | |
LEV | −0.095 | −0.177 * |
(−1.09) | (−1.93) | |
BSIZE | 0.015 * | 0.015 ** |
(1.96) | (2.08) | |
INDBOC | −0.021 | −0.043 ** |
(−0.87) | (−2.05) | |
BIG4 | −0.008 | 0.017 |
(−0.18) | (0.43) | |
PPE | 0.160 ** | 0.046 |
(2.10) | (0.57) | |
RND | −0.269 | −1.222 |
(−0.13) | (−0.88) | |
LNAGE | 0.021 | 0.043 |
(0.56) | (1.09) | |
_cons | −0.100 | −0.549 |
(−0.24) | (−1.18) | |
Year FE | Yes | Yes |
Industry FE | Yes | Yes |
GRI FE | Yes | Yes |
F | 19.290 | 6.669 |
r2_a | 0.426 | 0.352 |
N | 546 | 546 |
(1) | (2) | |
---|---|---|
SR | SR | |
LAG_SR | 0.536 *** | 0.535 *** |
(9.51) | (9.49) | |
AEM_DEC | 0.188 ** | |
(2.52) | ||
AEM_MCN | 0.195 ** | |
(2.58) | ||
FSIZE | 0.012 * | 0.013 * |
(1.72) | (1.77) | |
ROA | 0.001 | 0.001 |
(0.90) | (0.92) | |
LEV | −0.031 | −0.031 |
(−0.87) | (−0.88) | |
BSIZE | 0.000 | 0.000 |
(0.04) | (0.04) | |
INDBOC | −0.002 | −0.002 |
(−0.24) | (−0.22) | |
BIG4 | 0.028 | 0.028 |
(1.43) | (1.44) | |
PPE | 0.038 | 0.042 |
(0.93) | (1.01) | |
RND | 0.467 | 0.444 |
(0.62) | (0.58) | |
LNAGE | 0.025 | 0.025 |
(1.15) | (1.14) | |
_cons | −0.062 | −0.072 |
(−0.29) | (-0.34) | |
Year FE | Yes | Yes |
Industry FE | Yes | Yes |
GRI FE | Yes | Yes |
F | 23.344 | 23.377 |
r2_a | 0.572 | 0.572 |
N | 635 | 635 |
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Share and Cite
Ningsih, S.; Prasetyo, K.; Puspitasari, N.; Cahyono, S.; Kamarudin, K.A. Earnings Management and Sustainability Reporting Disclosure: Some Insights from Indonesia. Risks 2023, 11, 137. https://doi.org/10.3390/risks11070137
Ningsih S, Prasetyo K, Puspitasari N, Cahyono S, Kamarudin KA. Earnings Management and Sustainability Reporting Disclosure: Some Insights from Indonesia. Risks. 2023; 11(7):137. https://doi.org/10.3390/risks11070137
Chicago/Turabian StyleNingsih, Sri, Khusnul Prasetyo, Novi Puspitasari, Suham Cahyono, and Khairul Anuar Kamarudin. 2023. "Earnings Management and Sustainability Reporting Disclosure: Some Insights from Indonesia" Risks 11, no. 7: 137. https://doi.org/10.3390/risks11070137