Main Article Content
Abstract
Financial report is an important factor for inventors to make investment decision
in capital market. The. Publicity of financial report which has relevant information for
decision making will be reacted by market player. Many investors and other users of
financial report do not pay attention to the process of publishing financial report, so it
pushes the emergence of dysfunctional behaviours, like earnings management
practices.The purpose of this research is to study and to find out empirically the
research’s evidence about the influence of audit committee and board of commissioner’s
quality, institution and management ownerships toward earnings management practice
and financial performance and their implication toward firm value. The population of this
research is companies listed in Indonesian Stock Exchenge during the period 2007 – 2010
in amount of 105 companies. Based on the criteria, there are only 60 companies chosen as
sample.
The Method of analysis used in this research is path analysis, with the following
hypotheses: (1) The Audit committee and the board of commissioner’s quality, institution
and management ownership have influence on the earnings management practice. (2) The
Audit committee and the board of commissioner’s quality, institution and management
ownership, the earnings management practice have influence on corporate financial
performance. (3) The earnings management practice and corporate financial performance
have influence on firm value.The results of this study indicate (1)The audit committee
quality negatively influence on earnings management practice, (2) The board of
commissioner’s quality negatively influence on earnings management practice (3) The
institutional ownership negatively influence on earnings management practice (4) the
managerial ownership negatively influence on earnings management practice but not
significantly (5) simultaneously The audit committee quality, The board of
commissioner’s quality, institutional ownership and managerial ownership, have
significant influence on earnings management practice, and (6) earnings management
practice positively influence on corporate financial performance but not significant, (7)
earnings management practice positively influence on firm value, but not significant, (8)
corporate financial performance positively influence on firm value.