Earnings Management and Its Determinants: The Role of Capital Structure

DOI

10.2991/978-94-6463-994-0_29How to use a DOI?

Keywords

Earnings Management; Information Asymmetry; Free Cash Flow; Operating Cash Flow; Capital Structure

Abstract

This research seeks to investigatee how information asymmetry, together with free and operating cash flow influence the management of reported earnings throughout the COVID-19 pandemic period and the period that follows. The study focuses on companies operating in various sectors and registered as issuers on the IDX, involving a total quantity of 109 sample entities. The data analytical techniques applied include regression of panel data analysis, the Sobel as well as the Wilcoxon signed-rank method. The empirical findings reveal that capital structure that measured as leverage, free cash flow, and operating cash flow significantly affect earnings management, while information asymmetry fails to exhibit a statistically significant influence. Capital structure does not mediate through impact of information asymmetry, free cash flow, and operating cash flow on earnings management. The Wilcoxon findings suggest that only earnings management differs significantly between the pandemic and post-pandemic periods, whereas the other variables show no significant differences. These results provide additional support for the perspective offered by agency theory, balance shifting theory, and pecking order theory in explaining earnings management behavior, while also offering practical implications for policymakers and corporate management in managing capital structure and enhancing financial information transparency.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Mustapa Abdurahman Hafidz
AU  - Hasni Yusrianti
PY  - 2026
DA  - 2026/02/23
TI  - Earnings Management and Its Determinants: The Role of Capital Structure
BT  - Proceedings of the 24th Malaysia-Indonesia International Conference on Economics, Management, and Accounting (The 24th MIICEMA) in conjunction with The 9th Sriwijaya Economics, Accounting, and Business Conference (The 9th SEABC) (MIICEMA-SEABC 2025)
PB  - Atlantis Press
SP  - 422
EP  - 441
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-994-0_29
DO  - 10.2991/978-94-6463-994-0_29
ID  - Hafidz2026
ER  -