Limitations and Implications

Oct 13, 2025 by windailys.com 35 views

Effect of CEO Change, Tax Planning, Deferred Tax Assets, Free Cash Flow, and Profitability of Profit Management in Manufacturing Companies Listed on the IDX

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a significant number of manufacturing companies listed on it. The performance of these companies is crucial for the growth and development of the Indonesian economy. One of the key factors that affect the performance of these companies is the management of profits, also known as earnings management. Earnings management is the practice of manipulating financial statements to achieve certain goals, such as increasing stock value or improving credit ratings.

This study aims to reveal the effect of the change of CEO, tax planning, deferred tax assets, free cash flow, and profitability of earnings management in manufacturing companies listed on the IDX during the 2017-2019 period. The study uses multiple linear regression methods to analyze the data obtained from financial statements and annual reports of 186 manufacturing companies listed on the IDX.

Methodology

The population of this study consisted of 186 manufacturing companies whose data were obtained from financial statements and annual reports on the website www.idx.co.id. The sampling technique used was purposive sampling, so that 52 companies were obtained as samples. The data analysis is carried out using multiple linear regression methods.

Results

The results of the study showed that the change of CEO and profitability had a significant influence on earnings management. Meanwhile, tax planning, deferred tax assets, and free cash flow do not have a significant effect on earnings management. Furthermore, the results of the study also showed that the change of CEO, tax planning, deferred tax assets, free cash flow, and profitability simultaneously had a significant influence on earnings management.

Why did the CEO change significant?

The change of CEO is often associated with changes in company strategies and policies, including in terms of earnings management. The new CEO may have a different leadership style and performance targets, which have an impact on the way the company manages profits. In addition, the new CEO may have the motivation to improve company performance in the short term to show its ability and increase stock value.

The change of CEO can also lead to changes in the company's management team, which can affect the way the company manages profits. For example, the new CEO may bring in new team members who have different expertise and experience, which can lead to changes in the company's financial management practices.

Limitations and Implications

This study has several limitations, such as the use of secondary data based on the company's financial statements. This can cause bias, because companies may have the motivation to manipulate financial information. In addition, this research only focuses on manufacturing companies listed on the IDX, so the generalization of research results for other companies needs to be done carefully.

Nevertheless, this research has important implications for stakeholders, such as investors, creditors, and regulators. The results showed that the change of CEO and profitability had a significant influence on earnings management. This information can help stakeholders in assessing the quality of company financial statements and making better investment decisions.

Suggestions and Development

Subsequent research can be done by expanding the scope of the sample, including other factors that might affect earnings management, and use more sophisticated analytical methods.

It is also important to note that profit management itself is not a bad thing. Within reasonable limits, earnings management can assist companies in achieving their long-term goals. However, excessive profit management can harm investors and other stakeholders.

Conclusion

In conclusion, this study provides evidence that the change of CEO and profitability have a significant influence on earnings management in manufacturing companies listed on the IDX. The study also highlights the importance of considering the change of CEO and profitability when assessing the quality of company financial statements.

Recommendations

Based on the findings of this study, we recommend that stakeholders, such as investors, creditors, and regulators, should consider the change of CEO and profitability when assessing the quality of company financial statements. We also recommend that companies should be transparent in their financial reporting and provide clear explanations for any changes in their financial statements.

Resource

Indonesia Securities Exchange: https://www.idx.co.id/
Financial Accounting Standards Board (FASB): https://www.fasb.org/
International Accounting Standards Board (IASB): https://www.iasb.org/

Future Research Directions

Future research can be done by expanding the scope of the sample, including other factors that might affect earnings management, and use more sophisticated analytical methods. It is also important to note that profit management itself is not a bad thing. Within reasonable limits, earnings management can assist companies in achieving their long-term goals. However, excessive profit management can harm investors and other stakeholders.

References

[List of references cited in the study]

Appendix

[Appendix containing additional information, such as data tables and figures]

Glossary

[Glossary of terms used in the study]

Index

[Index of terms and concepts used in the study]

About the Author

[Biography of the author]

Contact Information

[Contact information of the author]

Disclaimer

[Disclaimer statement]

Copyright

[Copyright statement]

License

[License statement]

Acknowledgement

[Acknowledgement statement]

Funding

[Funding statement]

Conflict of Interest

[Conflict of interest statement]

Ethics Approval

[Ethics approval statement]

Informed Consent

[Informed consent statement]

Data Availability

[Data availability statement]

Supplementary Materials

[Supplementary materials, such as additional data and figures]

Additional Information

[Additional information, such as data tables and figures]

FAQs

[Frequently asked questions]

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Q&A: Effect of CEO Change, Tax Planning, Deferred Tax Assets, Free Cash Flow, and Profitability of Profit Management in Manufacturing Companies Listed on the IDX

Q: What is the main objective of this study?

A: The main objective of this study is to reveal the effect of the change of CEO, tax planning, deferred tax assets, free cash flow, and profitability of earnings management in manufacturing companies listed on the IDX during the 2017-2019 period.

Q: What is the population of this study?

A: The population of this study consisted of 186 manufacturing companies whose data were obtained from financial statements and annual reports on the website www.idx.co.id.

Q: What is the sampling technique used in this study?

A: The sampling technique used in this study is purposive sampling, which resulted in 52 companies being obtained as samples.

Q: What is the data analysis method used in this study?

A: The data analysis method used in this study is multiple linear regression.

Q: What are the results of this study?

A: The results of this study showed that the change of CEO and profitability had a significant influence on earnings management. Meanwhile, tax planning, deferred tax assets, and free cash flow do not have a significant effect on earnings management.

Q: Why is the change of CEO significant?

A: The change of CEO is often associated with changes in company strategies and policies, including in terms of earnings management. The new CEO may have a different leadership style and performance targets, which have an impact on the way the company manages profits.

Q: What are the implications of this study?

A: The results of this study have important implications for stakeholders, such as investors, creditors, and regulators. The information can help stakeholders in assessing the quality of company financial statements and making better investment decisions.

Q: What are the limitations of this study?

A: This study has several limitations, such as the use of secondary data based on the company's financial statements. This can cause bias, because companies may have the motivation to manipulate financial information.

Q: What are the suggestions for future research?

A: Subsequent research can be done by expanding the scope of the sample, including other factors that might affect earnings management, and use more sophisticated analytical methods.

Q: Is profit management a bad thing?

A: No, profit management itself is not a bad thing. Within reasonable limits, earnings management can assist companies in achieving their long-term goals. However, excessive profit management can harm investors and other stakeholders.

Q: What are the resources used in this study?

A: The resources used in this study include the Indonesia Securities Exchange (IDX), the Financial Accounting Standards Board (FASB), and the International Accounting Standards Board (IASB).

Q: What are the related research topics?

A: The related research topics include earnings management, CEO change, tax planning, deferred tax assets, free cash flow, and profitability.

Q: What are the related research methods?

A: The related research methods include multiple linear regression, panel data analysis, and event study analysis.

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A: The related research fields include accounting, finance, management, and economics.

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A: The related research journals include the Journal of Accounting and Economics, the Journal of Financial Economics, and the Journal of Management Accounting Research.

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A: The related research conferences include the American Accounting Association (AAA) Annual Meeting, the European Accounting Association (EAA) Annual Congress, and the Asian Accounting Association (AAA) Annual Conference.

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