Ownership Structure and Audit Committee Influence on Earnings Persistence in Banking Firms: Evidence from 2019–2023

Abstract

The Financial Services Authority (OJK) has acknowledged that several banks
have lowered their profit targets for 2024 due to single-digit profit growth in
the first half of the year. As a result, banking sector profits in 2024 are
expected to be lower than those recorded in the previous year. This study
examines the impact of ownership structure—comprising managerial
ownership, institutional ownership, and ownership concentration—as well
as the role of the audit committee on the earnings persistence of banking
companies from 2019 to 2023. By addressing inconsistencies in previous
research findings, this study aims to provide a clearer understanding of these
relationships. The analysis employs multiple linear regression using the
Common Effect Model (CEM) in the EViews 12 software. The findings
indicate that managerial ownership has a significant negative effect on
earnings persistence, while institutional ownership does not exhibit a
significant influence. Conversely, ownership concentration and the audit
committee positively and significantly affect earnings persistence. Moreover,
the study confirms that ownership structure and the audit committee, when
considered simultaneously, have a significant impact on earnings
persistence.