Indonesia Conference Directory

This study aims to examine the effect of earnings management on the relationship between dividend change, and future earnings differed between family companies and non-family. These research use companies on the Indonesia Stock Exchange in 2009-2017. One of the essential predictions from the dividend-signaling hypothesis is that changes in dividends positively correlated with changes in future earnings. By using a regression test, the findings of this study indicate that in family companies dividend changes give a negative reaction to future earnings. However, the interaction of dividend changes with earnings management harms future earnings only in the second year. Therefore the family company conducts earnings management, thus negative impact on future earnings. The converse result shows that changes in dividends at non- family companies produce a positive reaction to future earnings in the first year. There is an interaction between dividend changes with earnings management actions reacting positively to future earnings in the first and second years. Furthermore, using the coefficient difference test, it was found that there was a difference in the effect of earnings management on the relationship between changes in dividends and future earnings. This result differs between family companies and non-family companies.