AUDIT COMMITTEES IN ACTION: MODERATING EARNINGS MANAGEMENT STRATEGIES DURING FINANCIAL DISTRESS
Main Article Content
Maulina Dyah Permatasari
Dian Sulistyorini Wulandari
Imamudin
This study aims to analyze the effect of financial distress on earnings management with audit committee effectiveness as a moderating variable. The research data were derived from annual reports of non-financial companies listed on the Indonesia Stock Exchange (IDX) during the 2020–2024 period, selected using purposive sampling. The analysis method employed was panel regression using the Panel Least Squares (PLS) approach with a moderation test. The results indicate that financial distress has a negative and marginally significant effect on earnings management. However, when the interaction variable between financial distress and the audit committee is introduced, the results show that the audit committee strengthens the relationship between distress and earnings management. This suggests that the existence of audit committees in some firms does not necessarily function effectively to curb managerial opportunism, particularly under financial pressure. These findings provide crucial implications for policymakers and practitioners to enhance the quality and independence of audit committees in corporate governance practices.
Arosa, B., Iturralde, T., & Maseda, A. (2019). The impact of ownership structure on the relationship between audit committee and audit quality. Journal of Corporate Finance, 57.
Dash, S., & Dey, S. K. (2025). Does Corporate Governance Moderate the Effects of Financial Distress and Earnings Management on Financial Performance? Evidence from NSE 100 Companies. Metamorphosis, 09726225251334850. https://doi.org/10.1177/09726225251334850
Ferdina, A., Ardiyani, K., & Duwinaeni, L. (2024). The Influence of GCG on Financial Performance with Earnings Management as the Intervening Variable. Faculty of Economics and Business International Proceedings.
Huang, H., Liu, S., Gong, Y., Yan, Z., & Ge, Z. (2025). Export control and earnings management: Evidence from China. International Review of Financial Analysis, 104, 104341. https://doi.org/10.1016/j.irfa.2025.104341
Mardianto, M., & Novita, N. (2024). How Financial Distress, Audit Committee, and CGI Shape Earnings Management through Stock Liquidity. Jurnal Akuntansi, Maranatha University, 16(2), 405–421.
Ozkan, S., & and Alfarhan, L. (2025). Earnings manipulation and cash holdings: A Beneish M-score analysis in G7 nations. Cogent Business & Management, 12(1), 2502542. https://doi.org/10.1080/23311975.2025.2502542
Sadjiarto, A., Hartanto, S., & Octaviana, S. (2020). Analysis of the Effect of Business Strategy and Financial Distress on Tax Avoidance. Journal of Economics and …, Query date: 2023-01-22 19:43:00. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3539036
Thalita, A., Hariadi, B., & Rusydi, M. (2022). The effect of earnings management on tax avoidance with political connections as a moderating variable. … Journal of Research in Business and …, Query date: 2023-01-22 19:43:00. https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/1864
Wijaya, R., Wahyudi, I., & Arum, E. D. P. (2025). Determinants of Earnings Management: The Moderating Role of Firm Size. Journal of Management World, 6(4).
Wijayanti, D. M., & Salsabil, S. F. (2024). The effect of asymmetric information and financial distress ratio on earnings management with corporate governance as moderating variables. Diponegoro International Journal of Business, 10(6).
Yoshida, D. (2022). Effect Of Earnings Management, Leverage and Independent Commissioner on Tax Avoidance. EPRA International Journal of Multidisciplinary …, Query date: 2023-01-22 19:43:00. http://eprajournals.net/index.php/IJMR/article/view/752
Zgarni, I., Halioui, K., & Zehri, F. (2020). Do audit committees and board characteristics matter in the quality of financial reporting? Evidence from Tunisian companies. Managerial Auditing Journal, 35(2). https://doi.org/10.1108/MAJ-01-2019-2117
