The Roles of Female Directors and Earnings Management on Annual Report Readability
Eva Oktavini (a*), Elvia R Shauki (b)
a) Faculty of Economics and Business, Indonesia University (UI)
Universitas Indonesia, Kukusan, Beji, Kukusan, Kecamatan Beji, Kota Depok, Jawa Barat 16425
b) Faculty of Economics and Business, Indonesia University (UI)
Universitas Indonesia, Kukusan, Beji, Kukusan, Kecamatan Beji, Kota Depok, Jawa Barat 16425
Abstract
Abstract- This study was motivated by the concern of regulators and academicians regarding the level of companies- annual reports readability. The purpose of this study is to examine the influence given by the presence of female directors and earning management on the readability of the annual report while also examining the mediating role of earning management. Specifically, the readability of the companys annual report will be seen from the management perspective using the FOG index on companies listed on the Indonesia Stock Exchange during 2015-2018, (excluding the financial sector). This study shows that the presence of female directors reduces earnings management practices undertaken by the company. Also, this research proves that companies that conduct earnings management can complex company-s annual reports that are difficult to read as those companies tend to hide earnings management practices. Thus making the users of annual reports find it difficult to identify these practices. Moreover, the mediating role of earnings management has proven to be significant, which is the presence of female directors indirectly able to increase the readability of annual reports by reducing earnings management practices.
Keywords: Females Directors, Earnings Management, Annual Report Readability, Management Discussion and Analysis (MD&A), Readability
Topic: Economics, Finance, Banking, and Accounting