The Effect of Financial Distress on Earnings Management with Managerial Ownership as Moderating Variable

Abstract

This study sought to gather empirical evidence about the effect of
financial distress on earnings management moderated by
managerial. The study conducted on transportation and logistics
firms listed on the IDX during the period from 2020 to 2022. The
sample determining method used nonprobability sampling
through total sampling with 60 observations as sample.
Moderated Regression Analysis (MRA) was utilized as the data
analysis technique. The result showed that manager would take
advantage of asymmetric information and were encouraged to
take earnings management actions in order to minimize the
impact of financial distress. Furthermore, managerial ownership
weakened the influence of financial distress on earnings
management. When faced with conditions of financial distress,
management owned the firm shares would act in harmony with
principal.