ZULFIKAR, Rudi and MILLATINA, Firda and Mukhtar, Mukthtar and Astuti, Kurniasih Dwi and Ismail, Tubagus (2021) Antecedents of Disclosure on Internal Control and Earnings Management. Journal of Asian Finance, Economics and Business, 8 (3). 0391-0397. ISSN Print ISSN: 2288-4637 / Online ISSN 2288-4645

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Abstract

This study examines the effect of independent commissioners and the Audit Committee on internal control disclosure and its implications for earnings management in the banking industry listed on the Indonesia Stock Exchange for the period 2016–2018. In this study, a purposive sampling technique was used, combined with two multiple regression analysis models. The final sample for this study comprised 30 companies over the three years of observation, such that there were 90 observations in total. This study indicates that independent commissioners, as measured by their composition, do not affect the disclosure of internal control. However, as measured by the number of members, the Audit Committee had a positive effect on internal control disclosures. This study also indicates that the disclosure of internal control as measured by the Internal Control Disclosure index affects reducing the negative practice of earnings management. This study proves that the Audit Committee’s role is very dominant in assisting the Board of Commissioners in supervising internal control. This has implications for reducing earnings management practices. However, the Independent Commissioner’s role in the Indonesian banking industry has not been optimal in carrying out the supervisory function in this study. Keywords: Earnings Management, Internal Control Disclosure, Independent Commissioner, Audit Committee.

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