Posted on January 10th, 2012 at 2:53 PM by Bambang Purnomosidhi

The Study is motivated by the phenomenon of cases originated from the actions of earnings management that harm stakeholders. In fact, regulators have advised adoption of good corporate governance (GCG) to every company, but a satisfactorily is not yet found. The issue of the study is the agency conflict due to dividend policy might motivate management to take earnings management action, by considering the culture and GCG that are considered to affect earnings management behavior. The purpose of this study is to examine and analyze the effect of dividend policy, GCG, and organizational culture on earnings management.

This study is a quantitative research approach using Partial Least Square (PLS) The population of the study is companies listed on the Indonesia Stocks Exchange the period of 2007 to 2009. Sample selection is conducted using a purposive where the unit of analysis is the firm. The study uses secondary data source of s financial statements and the primary data sources of  culture data by distributing questionnaires. Test of the validity and reliability of research is performed prior to hypothesis testing.

The results of the study conclude that agency theory can explain the phenomenon of agency conflict due to dividend policy. The results show that the agency conflict due to dividend policy has positive effect on earnings management. The main finding of the study is that agency conflict due to dividend policy can be minimized by the existence of GCG and organizational culture, so that opportunistic earnings management can be reduced. Other finding of the study is that GCG negatively affect earnings management, while the organizational culture has no direct effect on earnings management.

Keywords: dividend policy, good corporate governance, organizational culture, and earnings management. (Baca fulltext: EFFECT OF GOOD CORPORATE GOVERNANCE AND ORGANIZATION)

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