The Role of Employee Stock Option Plan to Reduce Earnings Management Actions

Namla Elfa syariati, Bambang Subroto, Wuryan Andayani

Abstract


This research aimed to investigate the influence of earnings management to the compensation of the Employee Stock Option Plan (ESOP). Taking agency theory to explain theconflict between managers and shareholders. It was expected that ESOP would increasethe managerial responsibility to companies, but the managers have abused it to gainmore benefits for themselves. This research used simple linear regression and multiplelinear regression analysis with a sample of 120 publicly traded companies listed on theStock Exchange during 2011-2014. This study had one independent variable (ESOP) and controls four variables (managerial ownership, institutional ownership, the board of directors and audit committees). The result of this study was that earnings management had a positive impact on improving employee compensation due to the ESOP program. The existenceof managerial ownership and commissioners could reduce earnings managementactions in the implementation of the ESOP.

DOI: https://doi.org/10.26905/jkdp.v21i3.1281


Keywords


Earnings Management; Agency Theory; ESOP

Full Text:

pdf

References


Abbott, L.J., Parker, S., & Peters, G.F. 2004. Audit Committee Characteristics and Restatements. Auditing: A Journal of Practice and Theory, 23(1): 69-87.

Astika, I.B.P. 2008. Pembentukan Return Saham Ekspektasi melalui Manajemen Laba di Sekitar Peristiwa Pengumuman Program Opsi Saham Karyawan. Jurnal Aplikasi Manajemen, 8(3): 826-835.

Asyik, N.F. 2006. Dampak Penyaatan dan Nilai Wajar Opsi pada Pengaruh Magnituda Kompensasi Program Opsi Saham Karyawan terhadap Pengelolaan Laba. Simposium Nasional Akuntansi IX Padang.

Balsam, S., Chen, L.H.,& Sankara guruswamy, S. 2003. Earnings Management Prior to Stock Option Grants. Working Paper.Temple University dan Georgetown University.

BAPEPAM. 2006. Pembentukkan dan Pedoman Pelaksanaan Kerja Komite Audit.

Bergstresser, D.&Philippon, T. 2006. CEO Incentives and Earnings Management. Journal of Financial Economics,80(3): 511–529.

Boediono, G.S.B. 2005. Kualitas Laba: Studi Pengaruh Mekanisme Corporate Governance dan Dampak Manajemen Laba dengan Menggunakan Analisis Jalur. Simposium Nasional Akuntansi VIII Solo.

Cadbury Committee Report. 1992. Report of the Cadbury Committee on the Financial Aspects of Corporate Governance. London: Gee.

Chen, C.R.& Steiner, T.L. 2000. Tobin’s Q, Managerial Ownership, and Analyst Coverage: A Nonlinier Simultaneous Equations Model. Journal of Economics and Business, 52(4): 365-382.

Cheng, Q. &Warfield, T.D. 2005. Equity Incentives and Earnings Management. The Accounting Review,80(2): 441-476.

Cheng, Q., Warfield, T., &Ye, M. 2009. Equity Incentives and Earnings Management: Evidence from the Banking Industry. Journal of Accounting, Auditing and Finance, 26(2): 317-349.

Cornett, M.M., Marcus, A.J., Saunders, A., &Tehranien, H. 2006. Earnings Management, Corporate Governance, and True Financial Performance. Working Papers, 1-28.

Herdinata, C. 2012. Reaksi Pasar terhadap Pengumuman Employee Stock Ownership Program. Jurnal Keuangan dan Perbankan, 16(1): 77-85.

Hermeindito. 2004. Asymmetry Information and Management Control: Sensitivity Analysis of Investment and Leverage on Selecting Source of Financing. Disertasi.Ilmu Ekonomi Manajemen Universitas Gajah Mada.

IkatanAkuntan Indonesia. 2010. ED PSAK No. 35 (2010): PembayaranBerbasisSaham.

Iqbal, S. &Fachriyah, N. 2005. Corporate Governance Sebagai Alat Pereda Praktik Manajemen Laba (Earnings Management). Jurnal Akuntansi dan Keuangan, 6(4): 25-43.

Jensen, M.C.&Meckling, W.H. 1976. Theory of The Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3(4): 305-360.

Hartono, J. 2010.Teori Portofolio dan Analisis Investasi. Edisi Ketujuh. Yogyakarta: BPFE.

Kim, J. &Graskamp, E. 2006. Why Stock Options Still Make Sense. Financial Executive, 22: 45-47.

Krishnan, G.V. 2003. Does Big-Six Auditor Industry Expertise Constrain Earnings Management? Accounting Horizon, 17: 1-16.

Kumaat, L.C. 2013. Corporate Governance dan Struktur Kepemilikan terhadap Manajemen Labadan Kinerja Keuangan. Jurnal Keuangan dan Perbankan, 17(1): 11-20.

Kusuma, I.M.G.A. 2014. Pengaruh Konservatisme terhadap Hubungan Employee Stock Option Plan denganManajemenLaba. E-Jurnal Akuntansi Universitas Udayana, 7(2): 414-430.

Midiastuty, P.P. &Machhfoedz, M. 2003. Analisis Hubungan Mekanisme Good Corporate Governance dan Indikasi Manajemen Laba. Simposium Nasional Akuntansi IX Padang.

Mitra, S. 2002. The Impact of Institutional Stock Ownership on A Firm’s Earnings Management Practice: An Empirical Investigation. Dissertation. Louisiana State University.

Rahayu, R. &Cahyati, A.D. 2015. Komparasi Asimetri Informasi Sebelum Dan Sesudah Konvergensi Ifrs (Studi Kasus pada Perusahaan Agriculture dan Mining yang Terdaftar di BEI). JurnalWidya Warta, 1: 854-981.

Richardson, V.J. 1998. Information Asymmetry and Earnings Management: Some Evidence. Review of Quantitative Finance and Accounting, 15(4):325-347.

Scott, W.R. 2012.Financial Accounting Theory.6th Edition. Toronto: Prentince Hall

Schabus, M. 2012. Equity Incentives and Opportunistic Real Earnings Management. MasterThesis.

Sulistyanto, S. 2008. ManajemenLaba: Teoridan Model Empiris. Jakarta: Grasindo.

Trebucq, S. 2004. The Effect of ESOPs on Performance and Risk: Evidence from France. Journal Corporate Ownership and Control, 1(4): 81-93.

Wedari, L.K. 2004. Analisis Pengaruh Proporsi Dewan Komisaris dan Keberadaan Komite Audit terhadap Aktivitas Manajemen Labapada Perusahaan Publik di Indonesia. Tesis. Fakultas Ekonomi Universitas Gajah Mada.

Yermack, D. 1997. Good Timing: CEO Stock Option Awards and Company News Announcements. The Journal of Finance, 52(2): 449-476.




DOI: https://doi.org/10.26905/jkdp.v21i3.1281

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 813-3180-1534
Email: jkp@unmer.ac.id

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0