The Influence of Good Corporate Governance Towards Financial Performance Using Earnings Management As the Intervening Variable at Banking Companies Listed in Indonesia’s Stock Exchange
Abstract
The increase of non-performing loan in banking industry causes the commodity prices falling and value change. This research is aimed at testing the influence of good corporate governance (board of directors and audit committee) towards financial performance by using earnings management as the intervening variable. The sample of this research was 14 companies that are listed in Indonesia’s stock exchange within 2012-2016. This research used regression analysis method by using intervening variable and path analysis for mediator variable. The research finding shows that board of directors have positive and significant impact towards financial performance, audit committee has positive and insignificant impact towards financial performance, board of directors has negative and insignificant impact towards earnings management, audit committee has negative and insignificant impact towards earnings management, and earnings management has positive but insignificant impact towards financial performance. At Sobel test, earnings management does not mediate the relationship between the board of directors and financial performance, and earnings management does not mediate audit committee and financial performance.
Keywords: board of directors, audit committee, earnings management, financial performance
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