Indonesia Conference Directory

The globalization era has stimulated the spirit of competition of every company in the ever-intensifying business races in various sectors. In an attempt to sustain the company-s life, earnings figures are kept positive to attract investors and to elevate the company-s social status. Earnings management is a company-s strategy to maintain profitability by modifying financial statements through accounting policies, which inflicts harm to financial statement users in Indonesia. This study was aimed to examine whether firm size, financial distress, and audit quality are influenced by earnings management. This research is a quantitative study with secondary data. A sample of 12 banking companies listed on the Indonesia Stock Exchange in 2014–2018 was used in this research. This research also employed descriptive analysis and panel data regression analysis. Results showed that firm size had a significant negative effect on earnings management, financial distress had a significant positive effect on earnings management, audit quality had no significant effect on earnings management. A multitude of issues arising in banking companies involve earnings management behavior. It is suggested that investors and community analyze deeper the companies in which to invest. Companies are also advised against earning management practices harmful to financial statement users.