ANALYSIS OF FACTORS AFFECTING EARNINGS MANAGEMENT WITH THE COVID-19 PANDEMIC AS A MODERATING VARIABLE

Abstract

This research aims to examine the influence of profitability, leverage, audit fee, and audit tenure on earnings management with the COVID-19 pandemic as a moderating variable. Earnings management was measured using the calculation of discretionary accruals by implementing the modified Jones model. The sample used in this research consisted of 64 pharmaceutical and healthcare sector companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2022. The companies were selected through a purposive sampling method and tested using Moderating Regression Analysis (MRA) in Statistical Product and Service Solutions (SPSS) version 25. The results of this research indicated that audit fee has a positive effect on earnings management, audit tenure has a negative effect on earnings management, while profitability and leverage have no effect on earnings management. Furthermore, this research finds that the COVID-19 pandemic moderates profitability, audit fee, and audit tenure on earnings management, yet the COVID-19 pandemic does not moderate leverage on earnings management. The implication of this research suggest that company owners should consider these influencing factors to identify the presence of earnings management practices.