The Impact of Creative Accounting on Company’s Value of Banking Industry in Indonesia with Good Corporate Governance and Managerial Ownership as Moderating Variable

Abstract

This study sought to analyze the direct influence of creative accounting on Bankings’ Value, with Good Corporate Governance and Managerial Ownership serving as moderators. The independent board of commissioners (BoC) and audit committee (AC) serve as proxies for good corporate governance. We analyze the Banks’ value using three financial performance ratios: return on assets (ROA), return on equity (ROE), and net interest margin (NIM). This analysis is based on on data from 33 Indonesian banks from 2020 to 2023, including 132 observations. The data in this study were analyzed using generalized least squares method. By conducting statistical analysis with Eviews 11, a computional tool for time series econometrics. Our research found that creative accounting which is decided via discretionary accrual, has an impact ROA and NIM. Furthermore, BoC, AC, and managerial ownership (MO) may influence the impact of earnings management on ROA and NIM. However, according to the regression results, creative accounting has a minor impact on ROE. Our research adds to the body of empirical evidence that creative accounting fraud may have an influence on the Company’s value. On the other hand, our research has revealed new information indicating that the involvement of the BoC, AC and MO may interfere with the influence of earnings management on the company’s value which benefits for stakeholders.