The influence of the number of audit committee, profitability and leverage on profit management

Abstract

Purpose: This study aims to examine the effect of audit committee size, profitability, and leverage on earnings management in retail industry sector companies listed on the Indonesia Stock Exchange (IDX) from 2017 to 2020.

Methods: The research employs a descriptive quantitative approach, utilizing purposive sampling, to select retail industry companies listed on the IDX between 2017 and 2020. Data were collected using the documentation method through the official IDX website (www.idx.co.id), and hypothesis testing was conducted using the t-test.

Findings: The results show that the number of audit committees has no significant effect on earnings management. However, profitability and leverage have a considerable influence on earnings management in retail companies listed on the IDX from 2017 to 2020.

Practical implications: These findings suggest that companies need to carefully monitor their profitability and leverage levels, as both can influence the likelihood of earnings management practices. Strengthening internal control and governance mechanisms is essential to ensure transparent and reliable financial reporting.