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eISSN: 2581-9615 || CODEN: WJARAI || Impact Factor 8.2 ||  CrossRef DOI

Research and review articles are invited for publication in March 2026 (Volume 29, Issue 3) Submit manuscript

The influence of real and accrual earnings management on idiosyncratic risk with good corporate governance as a moderating variable

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  • The influence of real and accrual earnings management on idiosyncratic risk with good corporate governance as a moderating variable

Sang Agus Andy Surya Dharma *, I Gusti Ngurah A Suaryana, I Ketut Sujana and Made Gede Wirakusuma

Department of Master of Accounting, Faculty of Economics and Business, Universitas Udayana, Bali, Indonesia.
 
Research Article
World Journal of Advanced Research and Reviews, 2024, 24(02), 2651-2662
Article DOI: 10.30574/wjarr.2024.24.2.3639
DOI url: https://doi.org/10.30574/wjarr.2024.24.2.3639
 
Received on 20 October 2024; revised on 26 November 2024; accepted on 29 November 2024
 
This study investigates the impact of real and accrual earnings management on idiosyncratic risk, with a focus on the moderating role of good corporate governance, proxied by managerial ownership, in manufacturing firms listed on the Indonesia Stock Exchange from 2020 to 2022. Using moderated regression analysis, the findings reveal that both real and accrual earnings management practices negatively affect idiosyncratic risk, suggesting that earnings management may serve as a risk mitigation tool under efficient contracting perspectives. However, managerial ownership exhibits divergent effects: while it strengthens the risk-reducing impact of real earnings management, it unexpectedly amplifies the idiosyncratic risk associated with accrual earnings management, potentially due to managerial motivations to meet financial targets. These results highlight the complex role of corporate governance in earnings management, as it may act as both a stabilizing and risk-amplifying factor depending on the type of earnings management practiced. The study underscores the need for stakeholders to critically evaluate earnings management and corporate governance practices, while encouraging future research to include additional variables to further explain idiosyncratic risk determinants. The study's Adjusted R Square value of 8.1% indicates that other significant factors affecting idiosyncratic risk were not captured in this analysis.
 
Agency Theory; Positive Accounting Theory; Real Earnings Management; Accrual Earnings Management; Idiosyncratic Risk; Good Corporate Governance
 
https://wjarr.com/sites/default/files/fulltext_pdf/WJARR-2024-3639.pdf

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Sang Agus Andy Surya Dharma, I Gusti Ngurah A Suaryana, I Ketut Sujana and Made Gede Wirakusuma. The influence of real and accrual earnings management on idiosyncratic risk with good corporate governance as a moderating variable. World Journal of Advanced Research and Reviews, 2024, 24(2), 2651-2662. Article DOI: https://doi.org/10.30574/wjarr.2024.24.2.3639

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