The Impact of Board Independence and CEO Education on Earning Manipulation Beneish M-Score Models

Abstract

Management is accountable to shareholders, and within the business operations, there are many other shareholders with varied interests. Each shareholder wants management to take into consideration their interests, especially with regards to the company's earnings and sharing of such earnings. Earnings manipulation is the most important area where accountants through the will of the authorities could manipulate earnings. It is in the earnings manipulation that the aspect of corporate governments towards the management of earnings emerge. Board independence existence in the company is effective to ensure the financial reporting quality considering the transparency and accountability derive from it. The result of this research is the effect of good corporate governance and its impact on earnings manipulation, the two variables chosen are the independent board and CEO education. The results of this study found that independent boards had a negative and significant influence on earnings manipulation, while CEO education had a negative but not significant influence. The application of good corporate governance will have an impact on improving financial reporting and financial performance, reducing the practice of earnings manipulation because a high level of supervision will reduce these practices in financial accounting.