Abstract
This study examines whether low-growth companies with free cash flow (HFLG) will use income-increasing discretionary accruals to offset the low or negative earnings that inevitably accompany investment with negative net presents values (NPVs). Using 413 manufacturing company year observations over the period 2001-2005, the results show that there is a significantly association between HFLG and increasing discretionary accruals. This study also examines the role o f monitoring by auditors, creditors, and independent commissioners in mitigating the relation o f HFLG and income-increasing discretionary accruals. The results show that (1) monitoring by high-quality auditors and high-proportion o f independent commisioners are effective in mitigating the association o f HFLG and income- increasing discretionary accruals, which suggest that both their monitoring are more pronounced fo r HFLG firm s and (2) monitoring by high-debt creditors are effective in reducing income-increasing discretionary accruals, but their monitoring are not found to be more pronounced in HFLG firm. This result suggests that the vigilance o f creditors are more likely to increase when debt increase.
Recommended Citation
Tresnaningsih, Elok
(2008)
"MANAJEMEN LABA PADA PERUSAHAAN DENGAN PERMASALAHAN FREE CASH FLOW DAN PERAN MODERASI DARI MONITORING EKSTERNAL,"
Jurnal Akuntansi dan Keuangan Indonesia: Vol. 5:
Iss.
1, Article 2.
DOI: 10.21002/jaki.2008.02
Available at:
https://scholarhub.ui.ac.id/jaki/vol5/iss1/2
