The effect of political connection and earnings management on management compensation

Riky Rizki Junaidi; Sylvia Veronica Siregar

doi:10.1504/IJBG.2020.109828

The effect of political connection and earnings management on management compensation

Riky Rizki Junaidi, Sylvia Veronica Siregar

Department of Accounting

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

Abstract

This research aims to examine the direct effect of political connection and earnings management on management compensation as well indirect effect of political connection on management compensation through earnings management. There are three measures of earnings management used in this research, namely accrual, real, and aggregate earnings management. Samples of this research are non-financial companies listed in Indonesia Stock Exchange in the period of, 2014-2016 with 337 observations. We find that real earnings management has a significant positive effect on management compensation. However, there is no evidence that political connection has any effect on earnings management nor political connection on management compensation. Moreover, there is no evidence on the indirect effect of political connection on management compensation through earnings management.

Original language	English
Pages (from-to)	92-118
Number of pages	27
Journal	International Journal of Business and Globalisation
Volume	26
Issue number	1-2
DOIs	https://doi.org/10.1504/IJBG.2020.109828
Publication status	Published - 2020

Keywords

Earnings management
Management compensation
Political connection

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10.1504/IJBG.2020.109828

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title = "The effect of political connection and earnings management on management compensation",

abstract = "This research aims to examine the direct effect of political connection and earnings management on management compensation as well indirect effect of political connection on management compensation through earnings management. There are three measures of earnings management used in this research, namely accrual, real, and aggregate earnings management. Samples of this research are non-financial companies listed in Indonesia Stock Exchange in the period of, 2014-2016 with 337 observations. We find that real earnings management has a significant positive effect on management compensation. However, there is no evidence that political connection has any effect on earnings management nor political connection on management compensation. Moreover, there is no evidence on the indirect effect of political connection on management compensation through earnings management.",

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AB - This research aims to examine the direct effect of political connection and earnings management on management compensation as well indirect effect of political connection on management compensation through earnings management. There are three measures of earnings management used in this research, namely accrual, real, and aggregate earnings management. Samples of this research are non-financial companies listed in Indonesia Stock Exchange in the period of, 2014-2016 with 337 observations. We find that real earnings management has a significant positive effect on management compensation. However, there is no evidence that political connection has any effect on earnings management nor political connection on management compensation. Moreover, there is no evidence on the indirect effect of political connection on management compensation through earnings management.

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The effect of political connection and earnings management on management compensation

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Keywords

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