Title: Did the corporate governance reform have effect on creative accounting practices in emerging economies? The case of Indonesian listed companies

Authors: Theresia Trisanti

Addresses: Sekolah Tinggi Ilmu Ekonomi YKPN, Yogyakarta, Jalan Seturan, Yogyakarta 55281, Indonesia

Abstract: The primary objective of this research is to answer the question whether the corporate governance (CG) reform has a significant impact on the creative accounting practices, such as income smoothing (IS) practices, among Indonesian listed firms. The method of data analysis used in this research is the quantitative method, the sampling method is purposive sampling and the two statistic methods are the paired t-test and logistic regression analysis. The data used are the financial reports of each sample company from 2000 to 2011. Sample firms are classified as smoothers and non-smoothers using the IS index. The research concluded that there was a significant difference of IS practices after the CG reform compared with the prior period. Three independent variables, profitability, external auditor quality and debt financing, have a significant influence on IS practices. Two other independent variables, independent board committees and independent audit committees, have no significant influence on IS practices.

Keywords: corporate governance reform; creative accounting practices; income smoothing practices; emerging economies; Indonesia; profitability; external auditor quality; debt financing; independent board committees; independent audit committees.

DOI: 10.1504/JGBA.2016.074895

Journal for Global Business Advancement, 2016 Vol.9 No.1, pp.52 - 66

Available online: 22 Feb 2016 *

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