Influence of Earnings Management on Stock Prices with Good Corporate Governance as an Intervening Variable

  • Sochib Sochib STIE Widya Gama Lumajang
  • Moh. Hudi Setyobakti STIE Widya Gama Lumajang
Keywords: Earnings Management, Independent Commissioners, Audit Committee, Stock Prices

Abstract

The management team tries to achieve the budgeted profit target each period to maximize the value of the company as reflected in the stock price. In general, management runs its operations by way of earnings management practices at every level of management to pursue the budgeted profit targets of the company. Earnings management which is a tool to maintain profitability can give a signal of stock prices in the capital market. Using path analysis, during the 2014-2018 period a study of the effect of earnings management on stock prices was carried out with Good Corporate Governance proxied by an independent commissioner and audit committee as an intervening variable in national private commercial banks. The results of this study indicate that earnings management directly does not have a significant effect on stock prices. And indirectly earnings management through Good Corporate Governance in the proxy of independent commissioners has no significant effect, but through the audit committee has a significant effect on stock prices. And through independent commissioners and audit committees have no significant effect on stock prices. Good Corporate Governance practices carried out by Independent Commissioners and Audit Committees can establish effective supervision and control systems within an entity.

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Published
2019-08-31