The role of surplus free cash flow in income-increasing earnings management: The effectiveness of the board of commissioners and the audit committee as a moderating variable

This study examined the role of surplus free cash flow in income-increasing earnings management in Indonesia. It also focused on the impact of corporate governance on agency problems by analyzing its relationship to such management practices. The sample in this research consisted of 350 non-financial companies listed on the Indonesia Stock Exchange between 2013 and 2015. Based on the univariate multiple regression analysis, the findings revealed no significant relationship between surplus free cash flow and income-increasing earnings management, which indicates that a low degree of agency problems exists in Indonesia. It also found that corporate governance institutions play a substitutive role in reducing income-increasing earnings management practices.