Corruption and earnings quality: further evidence and exploration from Indonesia

Autor: Eko Arief Sudaryono, Wahyu Widarjo, Agung Nur Probohudono, Adhitya Agri Putra, Frank Aligarh
Jazyk: angličtina
Rok vydání: 2024
Předmět:
Zdroj: Cogent Economics & Finance, Vol 12, Iss 1 (2024)
Druh dokumentu: article
ISSN: 23322039
2332-2039
DOI: 10.1080/23322039.2024.2370913
Popis: Corruption within corporate entities continues to be a relatively overlooked yet significant issue to date. This study seeks to investigate the impact of corruption on the quality of earnings. The sample comprises 846 firm-years listed on the Indonesian Stock Exchange. Earnings quality encompasses factors such as earnings persistence, earnings value relevance, and earnings predictability. Corruption is gauged by the corruption per capita in the region where the firms are headquartered. The data analysis employs regression models incorporating firm and province effects. Broadly, the findings of this study indicate that corruption diminishes earnings quality. Heightened corruption is associated with weakened controlling and monitoring functions, increased information asymmetry, and diminished managerial quality, all contributing to a decline in earnings quality. This research not only expands upon previous studies but also reaffirms the relevance of the social capital concept while presenting new empirical evidence within a context of a country with a higher corruption perception index, such as Indonesia.
Databáze: Directory of Open Access Journals
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