the influence of earnings management on firm value … · the influence of earnings management on...

THE INFLUENCE OF EARNINGS MANAGEMENT

ON FIRM VALUE AND GOOD CORPORATE

GOVERNANCE AS MODERATING VARIABLE

(Empirical Studies Real Estate and Properties Companies Listed in

Indonesia Stock Exchange Period 2012-2014)

Created by:

Muhammad Anugrah Asshiddiq

1111082100007

DEPARTEMENT OF ACCOUNTING

INTERNATIONAL CLASS PROGRAM

FACULTY OF ECONOMICS AND BUSINESS

SYARIF HIDAYATULLAH STATE ISLAMIC UNIVERSITY

JAKARTA

SHEET STATEMENT

AUTHENTICITY SCIENTIFIC WORKS

Signature below:

Name : Muhammad Anugrah Asshiddiq

Student ID : 1111082100007

Faculty : Economics and Business

Department : Accounting (International Program)

Hereby declare that in the writing of this thesis, I;

1. Not use other people’s ideas without being able to develop and accountable.

2. Do not do plagiarism of other people’s works manuscript.

3. Do not use other people’s work without mentioning the original source or without

the owner’s permission.

4. Do not manipulate and falsify the data.

5. Own work and able to work responsible for this work.

If in the future there is a demand from the other side of my work, and have been accountably

proved, was indeed found evidence that I have violated the above statement, and then I am ready

to be sanctioned according to rules applicable in the Faculty of Economics and Business Syarif

Hidayatullah State Islamic University Jakarta.

Thus statement truly made with sincerely.

Jakarta, April 2016

(Muhammad Anugrah Asshiddiq)

CURRICULUM VITAE

MUHAMMAD ANUGRAH ASSHIDDIQ

Accounting Departement

Economic and Business Faculty

UIN Syarif Hidayatullah Jakarta

[email protected]

PERSONAL IDENTITY

Name : Muhammad Anugrah Asshiddiq

Gender : Male

Place & Date of Birth : Tangerang, Januari 21th 1994

Religion : Islam

Nationality : Indonesia

Address : Bukit Waringin B7 no. 21, Kedung Waringin, Bojonggede,

Kab. Bogor, Jawa Barat Indonesia

Phone/Mobile : +62877-7245-8513

E-mail Address : [email protected] - [email protected]

FORMAL EDUCATION

College : Accounting Departement, Economic and Business Faculty, UIN

Syarif Hidayatullah Jakarta

Senior High School : SMA-IT Al-Madinah

Junior High School : SMPN I Bojonggede

Elementary School : SDIT Daarul Fataa

v

The Influence of Earnings Management on Firm Value and Corporate

Governance as Moderating Variable

(Empirical Studies in Real Estate and Properties Companies listed in Indonesian

Stock Exchange Period 2012-2014)

ABSTRACT

The objective of this research is to examine the influence of the earnings

management concerning to the firm value and to examine whether the corporate

governance mechanism is the moderating variable between influence of earnings

management toward the firm value. The variable examined in this research is

earnings management measured with discretionary accrual by modified Jones

model, firm value, board of director, managerial ownership and institutional

ownership.

The sample which is used in this research are real estate and properties

companies listed in Indonesian Stock Exchange on period 2012-2014. This

research is using purposive sampling method to determine the sample and it

produce 12 companies as research sample. Regression analysis method used

descriptive statistic and multiple regression.

The result of this research shows earning management, size of company

and board of director, managerial ownership institutional, ownership as

moderating on earnings management simultaneously or together have ability to

effect the firm value. Partially board of director, managerial ownership and

institutional ownership is a moderating. Beside that the result also indicates that

size of company have significant effect positive to firm value. Board of director,

managerial ownership, and institutional ownership have significant effect negative

to firm value. Other variable do not have significant influence to firm value.

Keywords : earnings management, good corporate governance, firm

value, board of director, managerial ownership, institutional

ownership

vi

Pengaruh Manajemen Laba Terhadap Nilai Perusahaan dan Corporate

Governance sebagai Variabel Moderating

(Studi Empiris di Real Estate dan Properti Perusahaan yang terdaftar di Bursa

Efek Indonesia Periode 2012-2014)

ABSTRAK

Tujuan dari penelitian ini adalah untuk menguji pengaruh manajemen

laba menyangkut dengan nilai perusahaan dan untuk menguji apakah mekanisme

corporate governance adalah variabel moderasi antara pengaruh manajemen

laba terhadap nilai perusahaan. Variabel yang diteliti dalam penelitian ini

adalah manajemen laba diukur dengan akrual diskresioner oleh dimodifikasi

model Jones, nilai perusahaan, dewan komisaris, dewan direktur dan komite

audit.

Sampel yang digunakan dalam penelitian ini adalah perusahaan real

estate dan properti yang terdaftar di Bursa Efek Indonesia pada periode 2012-

2014. Penelitian ini menggunakan metode purposive sampling untuk menentukan

sampel dan menghasilkan 41 perusahaan sebagai sampel penelitian. Metode

analisis regresi digunakan statistik deskriptif dan regresi berganda.

Hasil penelitian ini menunjukkan manajemen laba, ukuran perusahaan

dan dewan direktur, kepemilikan manajerial, kepemilikan institusional sebagai

moderator pada manajemen laba secara bersamaan atau bersama-sama memiliki

kemampuan untuk mempengaruhi nilai perusahaan. Secara parsial dewan

direktur, kepemilikan manajerial dan kepemilikan institusional adalah

pemoderasi. Selain itu hasilnya juga menunjukkan bahwa ukuran perusahaan

berpengaruh signifikan positif terhadap nilai perusahaan. Direksi, kepemilikan

manajerial, dan kepemilikan institusional berpengaruh signifikan negatif

terhadap nilai perusahaan. variabel lainnya tidak berpengaruh signifikan

terhadap nilai perusahaan.

Kata kunci: manajemen laba, good corporate governance, nilai perusahaan,

dewan direktur, kepemilikan manajerial, kepemilikan institusional

vii

FOREWORD

Assalammu’alaikum Wr. Wb.

All praise to Allah SWT, the Most Gracious and the Most Merciful, the

Cherisher and Sustainer of the worlds; who always gives the writer all the best of

this life and there is no doubt about it. Shalawat and Salaam to the

Prophet Muhammad SAW and his family. With blessing and mercy from Allah

SWT, the writer can complete this thesis to fulfill one of the requirements in

accomplishing bachelor degree.

The writer is also well-aware that without advice and support from various

parties, this thesis will not be realized properly. Therefore, the writer would like to

take her opportunity to express her deep and sincere gratitude to the following:

1. Beloved parents and sister, my father Andi Nasri Hamzah, my mother Iin

Aryanti and also my sister Aliyah Khairunissa who have given all their

efforts morally and material to my college study. For also being such a

great parents and sister that always give me support and advice to finish

this thesis. Thank you for your love and prayers that never end. All

this efforts is dedicated to you all. May Allah SWT always give His

blessing for you all.

viii

2. Dr. Arief Mufraini, Lc., M.si. as the Dean of Economic and Business

Faculty.

3. Yessi Fitri, SE., Ak., M.Si and Hepi Prayudiawan,SE ,Ak ,MM., as the

Lead and Secretary of Accounting Department.

4. Prof. Dr. Azzam Jasin, MBA as the thesis supervisor I. By his

advice, direction, and guidance I can write this thesis properly. Thank

you so much for your time and kindness to help me in finishing this thesis.

5. Atiqah, SE, MS. Ak as the thesis supervisor II. Also by her advice,

direction, and guidance I can write this thesis properly. Thank you so

much for your time and kindness to help me in finishing this thesis.

6. All the lectures who have taught me many things patiently. Thank you for

all the knowledge that will lead me to a better future. May your charity and

deeds are always recorded by Allah SWT.

7. All the staffs in Economic and Business Faculty. Especially to Mr. Bonyx

who always reminds me to finish my thesis and provide me all the

procedures I need in making this thesis.

8. All my dear friends in Accounting International Program 2011 for every

foolish things, jokes, support and motivation that you have done. My

'Gang Kubur' mates and 'Warkop' mates for every moment we spend

together. And especially to my Oktaviani Dewi Masitho who always have

time for me in your activity. Thank you for your pray, help, support and

everythings that you did.

ix

9. Senior and junior thank you for support an help me in wite this thesis, and

all of you that I cannot mention one by one. Thank you for sharing joy

moments.

The writer realizes that this thesis is still far from perfection due to limited

knowledge of the writer. All the suggestions and constructive criticism are

welcomed in order to make this thesis better. Hope, this thesis will be useful for

any researcher or reader. May Allah SWT always bless every step in our life.

Wassalamu’alaikum Wr. Wb.

Jakarta, April 2016

The Writer

Muhammad Anugrah Asshiddiq

x

TABLE OF CONTENTS

Certifivation of Comprehensive Exam ..................................................................... i

Certifivation From Supervisor .................................................................................. ii

Sheet Statement Authenticity Scientific Work .......................................................... iii

Curriculum Vitae ....................................................................................................... iv

Abstract ...................................................................................................................... v

Abstrak ...................................................................................................................... vi

Foreword .................................................................................................................... vii

Table of Content ........................................................................................................ x

List of Tables ............................................................................................................. xiv

List of Figures ............................................................................................................ xvi

List of Appendix ........................................................................................................ xvii

Chapter I INTRODUCTION

A. Background ................................................................................. 1

B. Problem Identification ................................................................. 9

C. Research Objectives .................................................................... 9

D. Benefits of Research .................................................................... 10

Chapter II LITERATURE REVIEW

A. Theory Development ................................................................... 11

1. Agency Theory ...................................................................... 11

2. Good Corporate Governance (GCG) ..................................... 14

a. Concept Good Corporate Governance ............................ 14

xi

b. Good Corporate Governance’s

Legal Basis in Indonesia .................................................. 16

c. Basic Principle of Good Corporate Governance ............. 17

d. The purpose and Benefits of

Good Corporate Performance .......................................... 20

3. Board of Director .................................................................. 22

4. Ownership Structure ............................................................. 23

a. Institutional Ownership .................................................... 24

b. Managerial Ownership ...................................................... 26

5. Earnings Management .......................................................... 27

6. Company Performance Analysis .......................................... 30

B. Previous Research ...................................................................... 34

C. Theoritical Framework ................................................................ 36

D. Hypothesis .................................................................................. 38

Chapter III RESEARCH METHODOLOGY

A. Scope of Research ....................................................................... 41

B. Sampling Method ....................................................................... 41

C. Data Collection Method ............................................................. 42

D. Analyze Method .......................................................................... 43

1. Descriptive Statistical Analysis ............................................ 43

2. Classical Assumption ........................................................... 44

a. Normality Test ................................................................. 44

b. Multicollinearity Test ...................................................... 45

c. Autocorrelation Test ........................................................ 46

xii

d. Heteroscedasticity Test .................................................... 46

3. Hypothesis Testing ................................................................ 47

a. Coefficient of Determination (R2) ................................. 47

b. Multiple Regression Analysis ........................................ 48

c. Simultaneous Significance Test (F-Test) ........................ 48

d. Partial Significance Test (t-Test) .................................... 49

e. Moderated Regression Analysis...................................... 49

E. Definition of Operational Variable ............................................ 50

1. Independent Variable ........................................................... 50

2. Dependent Variable ............................................................ 52

3. Moderating Variable ............................................................ 53

Chapter IV ANALYSIS AND DISCUSSION

A. General Description of Research Object ..................................... 55

B. Analysis and Discussion .............................................................. 57

1. Descriptive statistic .............................................................. 57

2. Classic Assumption Test ...................................................... 59

a. Normality Test .................................................................. 59

b. Multicollinearity Test ........................................................ 66

c. Autocorrelation Test ........................................................ 68

d. Heterocedasticity Test ...................................................... 70

3. Hypothesis Testing ............................................................... 72

a. Coefficient of Determination (R2) .................................... 72

b. Multiple Regression Analysis .......................................... 75

c. Simultaneous Significant Test (F-Test) ........................... 81

xiii

d. Significant Partial Test (t-Test) ........................................ 83

e. Moderate Regression Analysis ......................................... 89

Chapter V CONCLUSIONS AND RECOMMENDATIONS

A. Conclusion .................................................................................. 92

B. Recomendation ........................................................................... 93

REFERENCE ......................................................................................................... 95

APPENDIX I ........................................................................................................... 101

APPENDIX II ......................................................................................................... 105

xiv

LIST OF TABLE

NO DESCRIPTION PAGE

2.1 Previous Research .......................................................................................... 34

3.1 Summary of Variable Operational Research ................................................. 54

4.1 Sample Selection .......................................................................................... 56

4.2 List of Companies Sample ............................................................................. 56

4.3 Descriptive Analysis ...................................................................................... 57

4.4 One Sample Kolmogorov-Smirnov Test (Model 1) ...................................... 60



4.7 Multicollinearity Test (Model 1) ................................................................... 66



4.10 Autocorrelation Test (Model 1) ..................................................................... 69



4.13 Criteria of Correlation Coefficient ................................................................. 73

4.14 Model Summary (Model 1) ........................................................................... 73



4.17 Multiple Regression Analysis (Model 1) ....................................................... 75



4.20 Simultaneous Significant Test (Model 1) ...................................................... 81

xv



4.23 Partial Test Result (Model 1) ......................................................................... 83



xvi

LIST OF FIGURE

NO DESCRIPTION PAGE

2.1 Theoritical Framework ................................................................................. 36

4.1 Normality Test (Model 1) .............................................................................. 62



4.4 Histogram (Model 1) ..................................................................................... 64

4.5 Histogram (Model 2) ..................................................................................... 65

4.6 Histogram (Model 3) ..................................................................................... 65

4.7 Scatterplot (Model 1) ..................................................................................... 71



xvii

LIST OF APPENDIX

NO DESCRIPTION PAGE

APPENDIX I Sample Descriptive ...................................................................... 101

APPENDIX II Output SPSS .................................................................................. 105

1

CHAPTER I

INTRODUCTION

A. Background

At this time the people of the world economy is facing a massive transition

process in the field of economy, namely globalization. globalization leading to

free trade and open investment climate lead to greater competition, as a result

the company is required to operate in a more competitive and productive in

improving firm value.

The performance is an overview of the implementation of an activity's

achievements in realizing the objectives of the company. Where one of the

important objectives of the establishment of the company is maximizing

shareholder wealth through increased value of the company (Brigham and

Houston, 2001). The company's financial performance is a reflection of

the financial condition of a company are analyzed with the tools of

financial analysis, so that it can be known about either the bad financial state

of a company that reflects the achievements of the work in a given period.

With the company's financial performance is also called a determination that

measures concerning both the company in bad work achievement can be seen

from its financial condition in a certain period.

Going public is one way a business entity to obtain funds by way of selling

and offering to relinquish rights to shares with payment. Business entities may

2

go public by selling new shares originating from authorized capital as well as

the old shares originating from the capital that has been paid (Sumantoro,

1990 : 64). In order to attract the investors, the company must provide details

of the financial statements as financial performance assessment has been

carried out. The financial condition of the company will be known from the

company's financial statements consisting of balance sheet, income statement

and other financial reports. By conducting an analysis of the financial

statement the investors know about the company financial performance

(Palupi, 2013).

Companies that go public are managed by separating the functions of

ownership (principal) with management or managerial function (agent). The

separation of these functions form an agency relationship is a relationship in

which shareholders entrust the management of the company is done by

another person or manager (agent) in accordance with the interests of the

owner (principal) by delegating some decision-making authority to the agent

(Jensen and Meckling, 1976). As a result of devolution and appointment

management (manager) has brought various consequences and impact of the

separation of powers and interests between the owner (principal) and

management (agent) that will cause agency problems (Berle and Means,1934).

The agency problem arises as a result of the opportunistic nature of the

management (agent) who tend to prefer the welfare that is contrary to the

goals of the principal (Jensen and Meckling, 1976). Management (agent)

3

considers that the company's success in achieving performance (performance)

is the result of work without seeing a large contribution from other parties

including the owners (stakeholders). In relation to the agency problem, some

experts argue that the presence of the agent and the principal is one of the

factors on which the emergence of the theory of agency.

Disharmony the objectives and interests between the agent and the

principal can lead agency cost and asymmetric information. Asymmetric

information is an imbalance between the information held by the agent and the

principal in the management of the company (Ujiyantho and Pramuka, 2007).

There are two types of asymmetry of information, namely: adverse selection

and moral hazard. Adverse selection, is a condition in which the management

has more information from the owner (principal) about the company's

prospects, while moral hazard, a condition where the owner (principal) who do

not know the activity of management (Scott, 2003). The existence of

asymmetric information that gives an opportunity for management to perform

earnings management (Richardson, 1998).

Healy and Wahlen, 1999 in Theresia, 2005) states that earnings

management is the management's efforts to change the financial statements

aimed at misleading the shareholders who want to know the performance of

the company or to influence contractual outcomes that rely on accounting

numbers that reporting. Gumanti (2000) stated that earnings management

allegedly committed by managers or preparers of financial statements in the

4

financial reporting process of an organization because they are expecting a

benefit from their actions. Note that earnings management is not always

associated with an attempt to manipulate the data or accounting information,

but more likely to be associated with the selection of accounting model

(accounting methods) to set the gain that could be done because it is allowed

according to the accounting regulations. If the company is in a condition

where the management cannot achieve the profit target set, then the manager

will make modifications profit is still in accordance with the applicable

accounting standards. Management motivated to show good performance in

generating maximum profits for the company so that management tends to

select and apply accounting methods that can provide a better return

information (Halim, et al; 2005).

Earnings management action by management has lead to scandal in

financial reporting (accounting) such as Merck, Wordcom and Enron as well

as several other large companies in the United States (Cornett et al; 2006).

Some major cases in corporate financial reporting scandals involving major

companies in Indonesia including PT. Kimia Farma Tbk, and Bank Lippo

Tbk. PT Kimia Farma Tbk indicated inflate the annual net profit of 32.668

billion rupiah in 2004. While PT. Indofarma Tbk perform earnings

management practices by presenting overstated net income by presenting a

higher inventory than it should, so that cost of goods sold that year occurred

understated (Bapepam, 2004).

5

In this case a violation of the principle of disclosure is accurate and

transparency are consequently extremely detrimental to investors, because it

overstated profits have formed the basis of transactions by investors to do

business. With the existence of such cases, it is proved that the application of

corporate governance is still very weak, because of the practice of

manipulation of financial statements still do despite being away from the crisis

period in 1997-1998. Evidence indicates weak corporate governance practices

in Indonesia leads to deficiencies in the company's decision-making and action

(Tjager, et al, 2003 in Hardikasari, 2011).

Good corporate governance is control efforts by the company to improve

performance management by making control more focused on monitoring the

behavior of the manager, so that the action taken by the manager is

accountable to the parties with an interest in the company. Warsono, et al

(2010) states that there are five basic principles of corporate governance that

must be met and is owned by five groups of participants in the company that

the Board of Directors, Board of Executives, Board of

Commissioners/Committees, Auditors, and Stakeholders. Five principles are

Transparency, Accountability and Responsibility, Responsiveness,

independence, and Fairness.

The issue of corporate governance started to become an important

discussion, especially in Indonesia, namely after Indonesia experienced a

period of crisis since 1998. Many people say that the length of the repair

6

process problems that the crisis in Indonesia due to the very weak of

implementation corporate governance in enterprises in Indonesia. Since then,

both the government and investors began to give significant attention in the

corporate governance practices (Hardikasari, 2011).

The failure of some companies and the onset of the financial crisis as a

result of malpractice cases are strong evidence of poor practice of Good

Corporate Governance. According to Pangestu and Hariyanto (2004), the

characteristics of weak good corporate governance practices in southeast

Asia is (1) the existence of a concentration of ownership and the power

of insider shareholders (including the government and the parties related to

the central power); (2) the weak financial sector governance and (3) the

ineffectiveness of internal rules and the absence of the consent law for

minority shareholders to deal with majority shareholder and manager.

Therefore, based on phenomena above the author interested to analyze :

“The Influence of Earnings Management on Firm Value and Good Corporate

Governance as Moderating Variable”

This research has been done by several researchers. Research conducted

by Herawaty (2008) examine the role of Corporate Governance Practices as a

variable that moderates the effect of Earnings Management to the value of the

firm. The variable examined in this research is earnings management

measured with discretionary accrual, firm value, institutional ownership,

7

independent commissioner and audit quality. The sample which is used in this

research listed non financial company in Indonesian stock exchange on period

of 2004-2006. The analytical method used is multiple regression method. In

doing multiple regression analysis, first performed classical assumption test in

order to meet the nature of regression estimation is BLUES (Best Linear

Unbiased Estimator).

Sutrisno (2010) examine the influence of the earnings management

concerning to the firm value and to examine whether the corporate governance

mechanism is the moderating variable between influence of earnings

management toward the firm value. The variable examined in this research is

earnings management measured with discretionary accrual by modified Jones

model, firm value, institutional ownership, managerial ownership,

independent commissioner and auditor quality. The sample which is used in

the research listed non financial company in Indonesian stock exchange on

period of 2005-2009. This research is using purposive sampling method to

determine the sample and it produce 58 companies as research sample.

Regression analysis method used descriptive statistic and multiple regression.

Dyas Tri Pamungkas (2012) examine the influence of corporate

governance through managerial ownership, institutional ownership, the

proportion of independent board and audit quality as a moderating variable of

the relationship between earnings management and firm value. The samples

used in this study were manufacturing companies listed on the Stock

8

Exchange during the years 2007-2010 with a random sampling method based

some multiple criteria and obtained a sample of 140 companies.

Fauzan Kamil (2014) examine the influence of earning management to

firm value with corporate governance mechanism as moderating variable. The

populations of this research are 77 companies which listed in LQ-45 Index in

Indonesia Stock Exchange within 2010-2012 periods. In this research 12

sample are selected and used after using non-probability – purposive sampling

method. The data used in this research are secondary data, which is financial

and annual report of the companies within 2012-2014 periods, which obtained

from www.idx.co.id site, and sites of the companies that listed in this research

sample.

This research is using statistic descriptive test, linear regression test, and

multiple linear regression test to get the understanding about the connection

between variables in this research.

The difference of this research with previous research, namely:

1. Years observed in this study was in 2012-2014.

2. In this study, researchers focus to one industry that is real estate companies

which include property. The goal is to avoid bias caused by differences in

the study.

9

3. In this research use corporate governance indicators is Board of Director,

Managerial Ownership and Institutional Ownership.

B. Problem Identification

Based on the above description of the background, the problem

formulation in this research are:

1. Whether the earnings management influence the firm value?

2. Whether the corporate governance proxied by board of director influence

the relationship between earnings management on firm value?

3. Whether the corporate governance proxied by managerial ownership

influence the relationship between earnings management on firm value?

4. Whether the corporate governance proxied by institutional ownership

influence the relationship between earnings management on firm value?

C. Research Objectives

The purpose of this study was to analyze empirically the influence of

earning management on firm value and good corporate governance as

moderating:

1. To analyze influence of earnings management on firm value.

2. To analyze influence of corporate governance proxied by board of director

on relation between earnings management and firm value.

10

3. To analyze influence of corporate governance proxied by managerial

ownership on relation between earnings management and firm value.

4. To analyze influence of corporate governance proxied by institutional

ownership on relation between earnings management and firm value.

D. Benefits of Research

Implementation of this study is expected to provide the following benefits:

1. For the authors, this study is expected to provide insight into the influence

of earnings management on firm value and corporate governance as

moderating.

2. For companies, this study can be used as additional information or inputs

that builds primarily on the influence of earnings management on firm

value and corporate governance as moderating.

3. For others, this research is also expected to be useful for those who require

a knowledge and insight.

11

CHAPTER II

LITERATURE REVIEW

A. Theory Development

1. Agency Theory

Agency theory is a theory that explains the relationship between

agents as those who manage the company and the principal as the owner

of both which are bound in a contract. The owner or principal is a party to

evaluate the information and agents are running as part of management

activities and decision making (Jensen and Meckling, 1976).

Jensen and Meckling (1976) also define an agency relationship as

a contract under which one or more persons the principals engage another

person (the agent) to perform some service on their behalf which involves

delegating some decision making authority to the agent. If both

parties to the relationship are utility maximizes, there is good reason to

believe that the agent will not always act in the best interests of the

principal. The principal can limit divergences from his interest by

establishing appropriate incentives for the agent and by incurring

monitoring costs designed to limit the aberrant activities of the agent. In

addition, in some situations, it will pay the agent to expend resources

(bonding costs) to guarantee that he will not take certain actions which

12

will harm the principal or to ensure that the principal will be

compensated if he does take such actions.

However, it is generally impossible for the principal or the agent

at zero cost to ensure that the agent will make optimal decisions from

the principal’s viewpoint. In most agency relationships, the principal

and the agent will incur positive monitoring and bonding costs (non-

pecuniary as well as pecuniary), and in addition, there will be some

divergence between the agent’s decisions and those decisions which

would maximize the welfare of the principal. The dollar equivalent of the

reduction in welfare experienced by the principal as a result of this

divergence is also a cost of the agency relationship, and we refer to this

latter cost as the “residual loss”.

In reality, managers will know more about internal information and

the company's prospects in the future than shareholders. Therefore,

managers should always give a signal about the condition of the

company to the shareholder. The signal can be given by the manager

through the disclosure of accounting information such as financial report.

The financial report is a very important thing for the external users

because these entities are in the greatest condition of uncertainty (Ali,

2002). Imbalance knowledge of information will lead to the emergence of

a condition known as information asymmetry. With the existence of

information asymmetry between management and the shareholder will

13

give the opportunity to the manager to do earning management, so that it

will mislead shareholders about the company's economic performance.

Corporate governance is a concept based on agency theory that is

expected to serve as a tool to provide assurance to investors that they will

receive a return on the funds they had invested. Corporate governance is

closely related to how to make the investors believe that managers will

give benefit to them, by believing in that the manager will not misuse the

invested fund to the illegal projects. Besides that, corporate governance

also relates to how the investors control the managers (Siallagan and

Machfoedz, 2006).

Special authority in every region in Indonesia in

implementing corporate governance is based on Law no. 5 of 1974 on the

Principles of Governance in the Region, as well as explaining the

relationship between central and local government. After the

implementation of policies to implement regional autonomy in Indonesia

through Law no. 22 of 1999 as amended by Law no. 32 of 2004

on Regional Government has change a paradigm and a very basic

structure, especially the local government relations (Executive) with the

Regional Representatives Council/DPRD (Legislative). In this

relationship, the Legislative delegates authority to run the government to

the executive.

14

Agency problems that arise among executives tend to maximize

utility (self- interest) in the creating or composing the local budget,

because they have the advantage of information (information asymmetry).

As a result, executives tend to do "budgetary slack". This happens due to

the executive try to secure its position in the government in the point of

view of legislative and the public / people, even for the sake of the next

election, but budgetary slack of APBD is more for personal interest

among executives (self-interest) rather than for the benefit of society.

(Latifah, 2010).

2. Good Corporate Governance

a. Concept of Good Corporate Governance

Good Corporate Governance indefinitely as a system which has

authority and as a control to add value for all of stakeholders. As

principal of corporate governance have interest for all shareholders

and stakeholders in corporate governance. Understand of corporate

governance according to the Turnbull Report in the UK (April 1999)

Corporate Governance is a company’s system of internal control,

which has principal to the management’s risk which are significant to

fulfill of its business objectives to safeguard the company’s asset and

enhancing over time the value of the shareholders’ investment. The

Implementation involved development of GCG, have two related

aspects, namely: hardware and software. The hardware includes the

15

establishment of technical or structural change and organizational

systems. The software includes more psychosocial change of

paradigm, vision. In real-world business practices, most companies

more emphasize hardware aspects, such as the preparation of systems

and procedures and the establishment of organizational structures.

Gede Raka, as panelist from Indonesian Institute for Corporate

Governance (IICG), stated of Good Corporate Governance have

implied the company and not make a profit for owners, but create

value for all concerned parties. Good Corporate Governance concept

reflects to share, care, and preserve. Good Corporate

Governance should changes of system and structure and dimension

paradigm, vision, mission of organization. Changes in technical

aspects of structure and systems are required as management’s

capabilities. In this case, focuses in concern are regularity and

smoothness on the process in organization as well as members of the

company's adherence to the policy to implement the Principles Good

Corporate Governance.

The definition according to Cadbury, said that Good Corporate

Governance is direct and control the company, in order to reach

balance between power of strength and authority of company. World

Bank defines Good Corporate Governance is a collection of laws,

regulations, and rules which have to fulfill and can push the

16

performance of corporate resources as function efficiently, in

order to generate economic value of sustainable long term for

shareholders and society as a whole.

According to decree of Minister of state-owned enterprise

No: PER-01/MBU/2011 regarding on the implementation of Good

Corporate Governance practices in state-owned enterprise is

principles underlying the process and mechanism of corporate

governance based enterprise management regulations and business

ethics.

b. Good Corporate Governance’s Legal Basis in Indonesia

In Indonesia, the implementation of good corporate governance

guidelines have been made by Komite Nasional Kebijakan

Governance (KNKG) through his new book released in 2006 entitled

“Pedoman Umum Good Corporate Governance Indonesia". Devices

Regulations and Legislation Circular of Minister of State for

Investment and Development of State-Owned Enterprises 106 of 2000

and Decree of Minister of State Enterprises no. 23 2000 that regulate

and formulate the development of good practice the company's

corporate governance in the company, and then refined with KEP-

117/M-MBU/2002 which is renewed by the Regulation of Minister of

State-Owned Enterprises PER-1/MBU/2011 of Implementation

Practices of Good Corporate Governance (GCG) on SOEs. There

17

has also been issued Decree of Minister of State Enterprises

no.103 Year 2002 on Establishment of Audit Committee. Capital

Market Supervisory Board No. through a circular.. SE-

03/PM/2000 has recommended that public companies to maintain audit

committees.

c. Basic Principles of Good Corporate Governance

Various rules and system as a regulator in management of

company’s need to be poured in form of principles that must be

adhered to the concept of Good Corporate Governance. In

generally, there are 5 (five) basic principles (KNKG, 2006),

namely:

1) Transparency

To maintain the objective of corporate must provide

information, which is material and relevant in a way that is

easily accessible and understood by stakeholders. Companies

should take the initiative to reveal not only the problem that

required by law, but also the importance for decision-making by

shareholders, creditors and other stakeholders. Corporate must

provide the information timely, adequately, clearly, accurately,

and all the important events that may affect the condition of

corporate.

18

2) Accountability

Corporate must be accountable for their performance in a

transparent and fair. It must be properly managed, scalable, and in

accordance with the interests of the company to remain

stakeholder’s interests. Specify details of duties and

responsibilities of each organization and all employees.

Corporate must ensure that the organs of company and all

employees have competent accordance with the duties,

responsibilities, and roles in implementing Good Corporate

Governance. Corporate needs to ensure an effective system of

internal control to be manage in the company.

3) Responsibility

Corporate must comply with laws and regulations and

carry out responsibilities for people and the environment. So, the

business can be maintained in the long run and gained recognition

as the Good Corporate Governance. The organization must adhere

to the principle of prudence and ensure compliance with regulatory

laws, statutes and regulations. Corporate should be carried out

social responsibility. Corporate has to be responsible in

management to the principle of corporate, as well as existing of

some regulation.

19

4) Independency

The corporate should be managed independently, so the

individual companies do not dominate other organs and no

intervention by other parties. Each organ must avoid domination

by any party, is not affected by particular interests, independent of

other interests, influence and pressure. Each organ shall carry out

the functions and duties in accordance with the statutes and

regulations, and not dominate the other, or passing the buck

between each other. Independency state whereas the corporate are

managed by professional without any conflict interest and pressure

from any side, which will be affected to the health of corporate.

To accelerate the implementation of Good Corporate

Governance, the corporate should be managed independently, so

their organizations do not dominate to the other and no

intervention other parties. Each organization of corporate has to

avoid the domination any party, not influenced by special interest,

free from conflict and pressure, so the decision-making will be

done objectively. Each organ must perform its functions and

duties in accordance with the statutes and regulations, do not

dominate others and passing the buck between each other to

realize an effective internal control.

20

5) Fairness

To carry out these activities, the company should pay

attention to the interests of stakeholders based on the principle of

equality and fairness. Corporate provide equal treatment to all

stakeholders. Corporate provides the opportunity for stakeholders

to give advice and opinion for company’s performance and open

access of information in accordance with the principles of

transparency within the scope of the position.

Equality and fairness defined as fair and equal treatment in

fulfilling the right of stakeholder arising under treaties and laws,

which have applied. Fairness also includes to fulfill the right of

investors, legal system and enforcement of regulations, which

protect investors. Fairness is expected to make the entire of

company’s assets are well managed and prudent, also expect to

protect all members. Corporate should provide the opportunity for

stakeholders to provide input and expression to the interests of

companies and open access to information in accordance with

the principle of transparency in their respective positions.

d. The Purpose and Benefits of Good Corporate Governance

The essence of corporate governance is improving the company's

performance through the supervision or monitoring of the performance

management and accountability to the shareholder and management

21

interests of other users, based on a framework of rules and regulations

(Gunarsih, 2003). In addition to these good corporate governance also

has its benefits, namely as follows:

1) Increase the company performance through the creation process

of a better decision making, improving the operational efficiency

of the company and further improve service to stakeholders.

2) Facilitate getting a cheaper financing funds so that it can further

improve the corporate value.

3) Reduce agency cost means that the cost that should be borne by the

shareholder as a result of the delegation of authority to the

management.

4) Increase the value of shares of the company so as to enhance the

company's image to the wider public in the long run.

5) Restore investor confidence to infuse capital in Indonesia.

Whereas the purpose of good corporate governance is as follows:

1) Protecting the rights and interests of the shareholders.

2) Protecting the rights and interests of the members of stakeholders.

3) Increase the value of the company and its shareholders.

22

4) Improve the efficiency and effectiveness of work of the Board of

Directors and management of the company.

5) Improve the quality of the relationship the Board of Directors with

senior management of the company.

3. Board of Directors

The board of directors is a party to a corporate entity tasked with

carrying out the operation and management of the company. Members of

the Board of Directors appointed by the Annual General Meeting (AGM).

According to the limited liability company act, which can be appointed as

a board member is an individual who is able to carry out legal action and

not been declared bankrupt or become a member of the directors or

commissioners who were found guilty of causing the company to go

bankrupt, or a person who never convicted of committing adverse financial

criminal state within five years prior to appointment.

The boards of directors are fully responsible for all operations and

management of the company in order to carry out the interests in achieving

corporate goals. The board of directors is responsible for the affairs of the

company with external parties such as suppliers, customers, regulators and

legal parties. With such a large role in the management of the company,

directors basically have a significant controlling interest in resource

management companies and funds from investors. Functions, powers, and

responsibilities of directors is expressly stipulated in Law no. 40 of 2007

23

on Limited Liability Company. In this law, the board has the task, among

others:

1) Leading publishing company with corporate policies.

2) Choose, assign, and supervise duties of the employee and the manager.

3) Approve the annual budget of the company.

4) Delivering a report to shareholders for the performance of the

company.

According to the general guidelines of good corporate governance

Indonesia, the number of board members must be tailored to the

complexity of the company with regard to its effectiveness in decision

making. In a company, the amount of both the board of directors and board

of commissioners vary. A large number of councils that can provide gains

or losses in the company.

4. Ownership Structure

The ownership structure is the shareholding in the company,

particularly the number of majority (either individually or together) will

determine the extent and intensity control to management. Ownership

structure is the percentage of shares held by the insider and the outsider

shareholder. Insider party i.e. shareholders who are aligned as a directors

and commissioners. Outsider party i.e. shareholders that have by the

institutions, individuals and other outside the company. Company

24

ownership can be seen from the point of the concept of corporate

governance, as the owner of an external mechanism, which is strongly

associated with the commissioners and directors (Hadiprajitno, 2013).

Agency problem is problems arising from the parties involved have

different interests with each other. The ownership structure is a mechanism

to reduce the conflict between management and shareholders (Faisal,

2004). So the agency problem can be mitigated by the presence of the

ownership structure, due to the presence of structured ownership structure,

believed to have the ability to influence the future course of the company

that may affect the agency costs incurred by the company.

Ownership structure can be individual investors, government, and

private institutions. The ownership structure is divided into several

categories. Specifically ownership structure category includes ownership

by institutional ownership and managerial ownership.

a. Institutional Ownership

Institutional ownership is ownership of shares owned by domestic

institutions, foreign institutions, government institutions such as

insurance companies, banks, investment companies and other.

Institutional ownership may indicate the presence of institutional

investors that strong corporate governance mechanisms which can be

used to monitor the management of the company (Tarjo, 2008).

Ownership structure of public companies in Indonesia is concentrated

25

in institutions. Institutions which mean the owner of a public company

in the form of institutions, not on behalf of the owner of individual

private (Sekaredi, 2011). The majority of institutions is a Limited

Liability Company.

Ownership by institutional investors is likely to encourage more

optimal monitoring the management performance, since share

ownership represents a source of power that can be used to support or

otherwise of the management performance. Jensen and Meckling

(1976) suggest that institutional ownership has a very important role in

minimizing agency conflicts that occur between managers and

shareholders.

According Barnae and Rubin (2005), institutional shareholders

with a large stake have an incentive to monitor corporate decision-

making. The greater the institutional ownership will make sound

power and boost the institution to oversee the management and

consequently will give greater impetus to optimize the value of the

company. In addition, ongoing surveillance of both managers and

reduce agency costs.

The existences of institutional investors are considered capable of

being an effective monitoring mechanism in any decision made by the

manager. This is due to the institutional investors involved in strategic

decision-making is not easy to believe the earnings manipulation.

26

According Cruthley (1999) who found that the monitoring is carried

out institutions capable substitute agency costs, thus decreasing agency

costs and increase firm value.

b. Managerial Ownership

Managerial ownership is ownership of shares of the company by a

manager or in other words the manager as well as a shareholder

(Christiawan and Tarin, 2007). According to Jansen and Meckling

(1976) one way in order to reduce the conflict between the principal

and the agent can be done by increasing managerial ownership of a

company. That means that managerial stock ownership in a company

will encourage pooling of interests between principal and agent so that

managers act in accordance with the wishes of shareholders.

Managerial share ownership can also aligns the interests between

managers and shareholders so that managers will be careful in taking

decisions because they directly share in the benefits and impact of the

decisions of making the wrong decision (Gelisha, 2011).

The greater the proportion of managerial stock ownership in the

company, the managers tend to try harder and motivated to create the

optimal performance of the company because managers have an

obligation to maximize the welfare of the shareholders, yet on the

other hand managers also have an interest to maximize their welfare

(Gelisha, 2011). The Manager will seek to reduce conflicts of interest

27

resulting in lower agency costs and can reduce the tendency of

managers to perform opportunistic actions.

5. Earnings Management

Earnings management is to intervene in the management of

external financial reporting process in order to achieve a certain income

level with the aim to benefit himself (or his own company). Opportunities

to distort that particular income arising from the accounting methods

provide opportunities for management to take note of a certain fact in

different ways and opportunities for management to involve subjectivity in

compiling estimates (Worthy, 1984).

Healy (1985) stated that earnings management occurs when

managers working in the company with the bonus plan tried to arrange

reported earnings in order to maximize the bonus they will receive.

Merchant (1989) defines earnings management as an action taken by

management to affect earnings that can provide information about the

economic benefits are not actually experienced companies. Scipper (1989)

defines as earnings management intervention in the financial reporting to

external parties for the purpose of personal gain.

Earnings management is the management's efforts to change the

financial statements aimed at misleading the shareholders who want to

know the performance of the company or to influence contractual

outcomes that rely on accounting numbers that report. Note that earnings

28

management is not necessarily linked to the process of manipulation by

the manager, but more likely to be associated with the process of selecting

the method of accounting (accounting method) to adjust benefits can be

obtained by the company because it is allowed by regulation accounting

earnings management, but this remains to be detrimental to shareholders

stocks because they get company information presented is not real by the

manager so that they can not accurately predict who would benefit they get

from the fund has been invested into the company (Healy dan Wahlen,

1998).

Based on the various definitions of the earnings management, some

of the characteristics of earnings management, namely: (1) carried out

based on the time dimension; (2) as an option to the company's accounting

policies for financial reporting purposes; (3) there are aspects of the

behavior of managers that manage earnings (earnings) with various

motives, for example, take advantage by asymmetry of information or to

hide poor performance.

According to Scott (2002) motivation of the company in this case

is the manager doing earnings management:

a. Bonus scheme

Managers who work in the company with the bonus plan will try to

arrange in order to maximize profits bonus that will be received.

29

b. Debt Covenant Clause

Motivation in line with the debt covenants hypothesis in a positive

accounting theory the closer a company to breach debt agreement then

the manager will tend to choose accounting methods that can "move"

the current period income so as to reduce the possibility of the

company suffered a breach of contract.

c. Political motivation

Large companies and other strategic industry tends to reduce

profits to reduce the visibility, especially during periods of high

prosperity. This action is performed to obtain the ease and facility of

government.

d. Taxation motivation

Taxation is one of the main reasons why companies reduce

reported earnings. By reducing reported earnings, the company can

minimize the taxes that must be paid to the government.

e. Substitution Chief Executive Officer (CEO)

CEO assignment that will expire or be pursuing a strategy of

maximizing retirement income to increase bonus. Similarly, the CEOs

whose performance is not good, it will tend to maximize profits in

order to prevent or undo his dismissal.

30

f. Initial Public Offerings (IPO)

When the company goes public, the financial information contained in

the prospectus is an important source of information. This information

can be used as a signal to potential investors, the managers tried to

increase reported earnings.

6. Company Performance Analysis

The company is an entity form the scene of a unity of the various

functions and operational performance work systematically to achieve a

certain goal. The goal of a company is an objective to be achieved all

stakeholders in the company. To achieve these objectives, the parties

interested in the company should cooperate systematic way to yield

optimal performance. One way to know whether a company in carrying

out its operations in accordance with a predetermined plan and in

accordance with the objectives was to find out from the company

performance.

Performance is a picture of the level of achievement of the results

of the implementation of an operational activity. Assessment of

performance here is a method and process assessment task execution

performance of a person or group of people or work units within a

company or organization in accordance with the performance standards or

goals set. In realizing the vision and mission of the organization,

31

companies need to have a measure to gauge how the achievement of goals

and objectives within a specific time period.

Thus, the performance as a description of the achievement of the

implementation of operational activities is vital in realizing the vision and

mission of the organization. Assessment of performance is a form of

reflection obligation and responsibility to report on the performance,

activities and resources have been used, accomplished and done. To assess

whether the stated goals have been achieved is not something easy to do.

This is because it concerns the management aspects which are not few in

number. Because of this, the company performance can be accessed

through a variety of indicators or variable to measure the success of the

company. However, in general the performance appraisal company

focused on the information derived from the financial statements. General

performance of the company usually represent in the financial statements.

These financial statements are useful to help investors, creditors, potential

investors and other users in order to make investment decisions, credit

decisions, as well as the stock analysis determines a company prospects in

the future. Through performance evaluation, the company can choose a

strategy and financial structure.

Since the company performance appraisal based on financial

statements, it is to assess the performance using financial ratios. These

ratios which will give the indication for the management of the investor

32

assessment of the company performance and its prospects in the future.

Ratios commonly used to assess the financial performance, among others,

is Tobin's Q. In the capital markets, managers and investors are more

interested in the market value of a company is more often using Tobin's Q

as the ratio to measure financial performance. According to Darmawati

(2011) Tobin's Q ratio can explain various phenomena in company

activities, such as the relationship between management ownership and

company value, the relationship between performance management and

profits, acquisitions, and financing policies, as well as dividends, and

compensation.

Darmawati (2011) also stated that the ratio of assessed to provide

good information, because it can explain various phenomena in corporate

events, such as the differences in investment and diversification decisions,

the relationship between management stock ownership and corporate

value. However, the use of Tobin's Q as financial ratios to demonstrate the

performance of the company has a number of drawbacks. According to

Bukhari (2011) that the market value can be the size of the firm value,

while the balance sheet, total equity capital of the company describe.

Assessment of the company not only refers to the nominal value, this is

due to the condition of the company to change at any time significantly.

Usually the pre-crisis nominal value of the company is quite high but after

crisis condition of the company slipped while nominal fixed.

33

From the above statement can be concluded that the decline in the

condition of the company after the crisis is sometimes not immediately

followed by a decrease in stock value. In fact, the nominal value of shares

requires a certain time lag to changes according to the condition of the

company after the decrease or increase in operational performance. This

does not include the risk that comes from the presence of a particular issue

or cause the movement of the stock price becomes abnormal. With such

conditions, researchers not use Tobin's q as a measure of company

performance, but researcher use profitability ratios for measured the

company performance. Profitability ratios indicate the ability of the

company assets to generate operating profits. Profitability ratios focus on

measuring the performance of the company's current and profitability

ratios are not tied to stock (Ferdiana, 2012).

Most researchers consider Tobin's Q are better able to explain the

actual state of the company. However, the high volatility of stock price

due to the influence of various macroeconomic factors can have a big

impact can affect the results of the calculation. This would not happen if

we used profitability ratios, because of these considerations this study used

as an indicator of performance, profitability ratios assessment indicates the

overall efficiency and performance of the company.

34

B. Previous Research

Table 2.1 Previous Research

(Continue to next page)

No. Researcher (Year) Title Variable

Result (Summary) Similarity Difference

1. Murhadi (2009)

The effect of good

governance practices

against earnings

management

practices by

companies

Variable :

Corporate

Governance,

Earnings

Management

Sample :

Manufacture

corpanies periode

2005-2007

The researcher found that only two

variables significantly influence the

earnings management practices that CEO

duality and the existence of a controlling

shareholder. While other independent

variables such as independent directors,

audit committee and also a shareholder

coalition outside the controlling

shareholders do not have any impact on

earnings management practices in the

company.

2. Dyas Tri

Pamungkas (2012)

Earnings

management on firm

value with good

corporate governance

as moderating

variable

Variable :

Earnings

Management,

Managerial

Ownership,

Institutional

Ownership,

Firm Value

Sample : LQ-45

Index Companies

Listed in

Indonesian Stock

Exchange Periode

2010-2012

The result of this research shows that

earnings management has no influence

toward firm value. However, corporate

governance mechanism that measured by

managerial ownership, institutional

ownership and independent commissioner

simultaneously affecting Firm value

significantly. In partial, managerial

ownership and institutional ownership are

moderating variable in influence between

earnings management and Firm value,

while independent commissioner is not


earnings management and Firm value.

35

Table 2.1 Previous Research (Continued)

No. Researcher (Year) Title Variable

Result (Summary) Similarity Difference

4

Khaliq Ur Rehman

Cheema and

Muhammad Sadat

Din (2013)

Impact of Corporate

Governance on

Performance of

Firms

Variable :

Corporate

Governance,

Firm Value

Variable : Firm

Value

measurement by

return on equity,

return on assets,

and earnings per

share.

The researcher found that CEO duality is

negatively and significantly related to

cement industry performance, as the

performance indicator for firm is EPS.

Family and non-family firms has also

impact on cement firm’s performance. Its

shows that board size do not affect the

performance of a firm.

5. Fauzan Kamil

(2014)

Earnings

management on firm

value with good

corporate governance

as moderating

variable

Variable :

Earnings

Management,

Managerial

Ownership,

Institutional

Ownership

Board of

Inndependent,

Firm Value

Sample : LQ-45

Index Companies

Listed in

Indonesian Stock

Exchange Periode

2010-2012

The result of this research shows that

earnings management has no influence

toward firm value. However, corporate

governance mechanism that measured by

managerial ownership, institutional

ownership and independent commissioner

simultaneously affecting Firm value

significantly. In partial, managerial

ownership and institutional ownership are


earnings management and Firm value,

while independent commissioner is not


earnings management and Firm value.

36

C. Theoritical Framework

Figure 2.1

Theoritical Framework

(Continue to next page)

Annual Report of All Listed Company on IDX as a

Property and Real Estate Business

Period 2010-2014

Independent Variable

Earnings Management

Control Variable

Size of the Company

Dependent Variable

Firm Value (Tobin’s Q)

Moderating Variables

1. Board of Directors

2. Managerial Ownership

3. Institutional Ownership

37

Figure 2.1

Theoritical Framework (Continued)

Classic Assumption Test

1. Normality

2. Multicollinearity

3. Autocolleration

4. Heterocedasticity

Moderate Regression Analysis

Analysis and Intepretation

Conclusion

Hypothesis Test

6. Test Coefficient of

Determination (R2)

7. Multiple Regression

Analysis

8. Simultaneous Significance

Testing ( F-Test)

9. Partial Significance Test

(t-Test)

38

D. Hypothesis

1. Earnings Management and Firm Value

As the manager of the company managers more aware of internal

information and prospects of the company in the future compared to the

owners (shareholders), giving rise to asymmetry of information. Managers are

required to provide a signal about the state of the company to the owner.

Given signal is a reflection of the firm value through the disclosure of

accounting information such as financial reports. The financial report is

important for external users because of the group's companies are in a

condition that at least a high degree of certainty (Ali 2002).

Asymmetry between the management and the owners give managers

the opportunity to perform earnings management to increase the firm value at

a given time so as to mislead the owners (shareholders) of the actual firm

value. Sloan (1996) examined the nature of the information content of the

accrual component and a component of cash flows is reflected in the share

price. Proved that the performance of profits derived from accrual as a

component of earnings management activities have lower persistence than

cash flow. Reported earnings greater than the operating cash flow that can

increase the firm value at this time.

H1 : Earnings management have positive influence on firm value.

39

2. Corporate Governance and Firm Value

In the perspective of agency theory, the agent is risk adverse and tend

to be selfish would allocate resources from investments that do not increase

the firm value to a more profitable investment alternatives. Problems agency

will indicate that the firm value will rise if the owner of the company can

control the behavior of the management in order not to waste resources

companies, either in the form of investments that are not feasible or in the

form of shirking. Corporate governance is a system that regulates and controls

the company that is expected to provide and enhance the company's value to

its shareholders. Thus, the implementation of good corporate governance is

believed to increase the firm value.

Klapper and Love (2002) found a positive relationship between corporate

governance and corporate performance as measured by return on assets

(ROA) and Tobin's Q. Another important discovery is that the application of

corporate governance at the enterprise level is more meaningful in developing

countries than in developed countries , It shows that companies that

implement good corporate governance would gain greater benefit in countries

with poor legal environment.

H2 : Practice corporate governance positively influence jointly and partially

to firm value.

40

3. Earnings Management, Corporate Governance and Firm Value

The company that organizes corporate governance system is believed

to limit opportunistic earnings management. Therefore, the higher the size of

board of director, the proportion of managerial ownership ana institutional

ownership reduce the tendency of earnings management. The negative

relationship between corporate governance and earnings management may

weaken the effect between earnings management and firm value.

H3 : Earnings management influence on the firm value weakened by the

practice of corporate governance.

41

CHAPTER III

RESEARCH METHODOLOGY

A. Scope of Research

This research is empirical study of hypothesis testing with using

causalities research method to determine the influence between the

independent variables (variables that effect) and the dependent variable (the

variable that is effected) with moderating variable. The independent variable

in this research is earnings management. The dependent variable in this

research is firm value and the corporate governance as moderating variable.

This study aimed to examine the influence of Earnings management

implementation towards the firm value and Corporate Governance as

moderating variable, the study on real estate and properties companies listed

in the Indonesian Stock Exchange (IDX) within 2012-2014. Corporate

governance proxies by Board of Director (BOD), Managerial Ownership

(MO), Institutional Ownership (IO), and firm value measure by Tobin’s Q.

B. Sampling Method

Sampling method is kind of method that take data from population.

Sample is a part of the number, and characteristic possessed by the population.

Research will not take all the populations, because due to limited funds,

manpower and time. So, sample can represents the population (Sugiyono,

2009:5). The sampling method used in this research is purposive sampling

42

method. In purposive sampling this research use judgmental sampling by

specific criteria (Sekaran, 2009:79).

1. The sample specific criteria in this research are as follow:

2. The company has published its annual report publicly within period 2012-

2014.

3. All Real Estate business listed in IDX that use IDR currency.

4. The company has the data Board of Director (BOD), Managerial

Ownership (MO), Institutional Ownership (IO), that will be tested in its

annual report.

C. Data Collection Method

This research uses secondary data. This type of data obtained through

research literatures which provide the theoretical basis and frame of mind to

support primary data, as well as to support problem identification

discussion (Indriantoro and Supomo, 2009:5). Secondary data refer to

information gathered from sources that already exist (Sekaran and Bougie,

2010:81). This research data will be acquired from reports on the

company’s website, annual reports of company or the media reports.

Secondary data used in this study are the annual report of real estate business

listed on the Indonesia Stock Exchange in 2010 - 2014.

43

D. Data Analyze Method

The method of data analysis used in this study is a model of multiple

regression analysis with the help of software SPSS 22 for Windows. Data

analysis was performed by descriptive statistical analysis, classical

assumptions test and hypothesis test. Classical assumptions test include

normality test, multicollinearity test, heteroscedasticity test and

autocorrelation test. Hypothesis test include multiple regression analysis, test

of coefficient of determination, simultaneous significance test and partial

significance test.

1. Descriptive Statistical Analysis

Descriptive analysis is used to provide an overview of the study

variables. Descriptive statistics were used, among others, mean, median,

minimum, maximum, and standard deviation (Ghozali, 2013:19).

Statistical analysis was used to test the quality of the data and testing

hypotheses. Statistical analyzes were performed was the classic

assumption test and hypothesis test.

The data in this study were analyzed with descriptive statistics.

Descriptive statistical testing in this research basically is a process

transformation research data in a form of tabulation in order that can be

easier to be understood and interpreted. Tabulation in generally is used by

researcher to obtain information about characteristics of primary variable

in research. The measurement applied in this descriptive statistical testing

44

depends on the type of scale of measurement. The descriptive statistical

testing obtains a picture or describes data that can be seen from median,

mean, mode, standard deviation, variance, maximum and minimum.

2. Classic Assumptions Test

Classical test assumption aims to determine the relationship

between the variables in the data. Before conducting regression analyzes,

first tested the classical assumptions to determine whether there is a

relationship between the variables.

a. Normality Test

Normality test aims to test whether the regression model, or

residual confounding variable has a normal distribution. There are two

ways to detect whether or not residual normal distribution, i.e. the

graph analysis and statistical tests (Ghozali, 2013: 160). Normality test

can use the tools such as statistical tests to Kolmogorov-Smirnov Z (1

- Sample KS), the basic decision-making (Ghozali, 2013: 164):

1) If the value Asymp. Sig. (2-tailed) less than 0.05, then H0 is

rejected. This means that the data are not normally distributed

residuals.

2) If the value Asymp. Sig. (2-tailed) of more than 0.05, then H0 is

accepted. This means that the data were normally distributed

residuals.

45

Another way to normality test can be done by looking at the spread

of the data (dots) on the diagonal axis of the graph or by looking at the

histogram from the residual. Basic decision-making, namely (Ghozali,

2013: 163):

1) If the point spread around the diagonal line and follow the

direction of the diagonal line, the regression model to meet the

assumptions of normality.

2) If the point spread away from the line or diagonal and do not

follow the direction of the diagonal line, the regression model did

not meet the assumptions of normality.

b. Multicollinearity Test

Multicollinearity test aims to test whether the regression model

found a correlation between the independent variables (Ghozali,

2013:105). A good regression model should not happen correlation

between the independent variables. To detect the presence or absence

of multicollinearity in the regression model can be seen from the value

of tolerance and the Variance Inflation Factor (VIF). Multicollinearity

views of the tolerance value <0.10 or VIF> 10. Both of these

measurements indicate each independent variable which is explained

by the other independent variables.

46

c. Autocorrelation Test

Autocorrelation test aims to test something, in a linear regression

model. There is a correlation between the error of a bug in the period t

to bug errors t-1 period or previous period (Ghozali 2013:110).

Diagnose the autocorrelation done through testing to test the value of

Durbin Watson (DW test) by (Ghozali 2013:111). Basis for decision-

making as follows:

1) If 0 < DW< DL there is any positive autocorrelation.

2) If DL < Dw < Du or 4-Du < D < 4-DL uncertain conclusion.

3) If 4-DL < Dw < 4 there is any negative autocorrelation.

4) If 0 < Dw < DL or Du < Dw < 4-Du there is no autocorrelation.

d. Heteroscedasticity Test

According to Ghozali (2013 : 139), the aim from heteroscedasticity

test is to test whether the regression model occur the variance

inequality of the residual from one observation to another observation.

If the variance from residual of one observation to other observations

is fixed, it is called homocedasticity and if it different called

heteroscedasticity. The presence of heteroscedasticity can be seen from

the graph Scatterplot between the predicted value of the dependent

variable is ZPRED with residual SRESID. If there is a pattern like dots

are there forms a particular pattern of regular, then there

47

heteroscedasticity. Conversely, if there is no clear pattern as well as

points that spread then there is no heteroscedasticity.

3. Hypotesis Testing

a. Test Coefficient of Determination ( R2)

The coefficient of determination (R2) was essentially measure how

far the model's ability to explain variation in the dependent variable.

Determination coefficient is between zero and one. Small value of R2

is the ability of independent variables in explaining the dependent

variable is very limited. Value close to one means that the independent

variable gives almost all the information needed to predict the

variation in the dependent variable (Ghozali, 2013: 97).

Coefficient determination is a statistical measurement of how well

the regression line approximates the real data point. By knowing the

value of R2, It can determine the magnitude contribution of

independent variables toward the dependent variable. R2 expresses a

value between zero and one. If R2 is near to 0, most of data variations

cannot be explained by the regression model. In this case, the

regression model fits the data poorly. On the other hand, if R2 is near

to 1, most of the variation in the dependent variable can be explained

by the regression model. In other words, the regression model fits the

data well (Sekaran, 2010).

48

The closer adjusted R2 score to 1, the better independent variables

explaining dependent variable The hypothesis in this study is

influenced by the value of the corresponding variable coefficient

significance after testing. Conclusion the hypothesis made by t-test.

b. Multiple Regression Analysis

Multiple regression analysis is used to test the effect of two or more

independent variables toward the dependent variable (Ghozali, 2013 :

96 ). Regression analysis divided into two kinds, simple regression

analysis (if there is only one independent variable) and multiple

regression analysis (if there is more than one independent variables).

Multiple regression analysis can be measured partially (indicated by

coefficient of partial regression) jointly indicated by coefficient of

multiple determination or R2

(Indriantoro and Supomo, 2002).

c. Simultaneous Significance Testing ( F-Test)

Essentially, F-test has purpose to know whether among

independent variables simultaneously have significant influence

toward dependent variable (Ghozali, 2013: 98). Independent variables

in this research are good corporate governance indicator and ownership

structure whereas dependent variable is company performance. So, F-

test has a function to know the effect of good corporate governance on

company performance. α used for this research is 0.05 ( 5%) with

assumption:

49

1) If sig ≥ 5%, ho is accepted.

2) If sig < 5%, ho is rejected.

d. Partial Significance Test ( t-Test)

Partial Significance Test or t-test basically has purpose to know

how far and how much the influence independent variables on

dependent variables (Ghozali, 2013:98). In this research, t-test is done

to know the effect of good corporate governance as independent

variables on company performance as dependent variable.

Assumption used for this test are if the significance value of t more

than α (significance value > α), then hypothesis is rejected but if on

contrary the significance value of t less than α (significance value < α),

so hypothesis is accepted. Level of significance (α) use in this research

is 0.05 (5%).

e. Moderated Regression Analysis (MRA)

The purpose of this analysis to determine whether the moderating

variables will strengthen or weaken the relationship between

independent variables and the dependent variable. Moderated

Regression Analysis (MRA) is a specific application of multiple linear

regression where the regression equation contains elements of

interaction (multiplication of two or more independent variables).

50

E. Definition of Operational Research

Operational variable is a way to set up a concept and how the concept

should be measured so that there are variables that can lead to other problems

of a variable depends on the situation and condition of other variables.

Operational variables based on the nature of the attributes of the object

observed in the study, can form both qualitative and quantitative researchers

made merely for the purpose of research, after understanding the attributes

based on the support of various runway.

1. Independent Variables

The independent variable is the type of variables that explain or

influence another variable or variables suspected as the caue of the

dependent variable (Indriantoro and Supomo, 2009: 64). The independent

variables in this research is earnings management thet proxy by

discretionary accrual using Jones model that modified Dechow et.al

(Dechow et.al in Herawaty, 2008) with the following step :

a) Total Accrual

TAC = NIit – CFOit

Description :

NIit = Net income company i on periode t

CFOit = cash flow of operation company i on periode t

51

b) Total accruals are estimated with a regression equation OLS

(Ordinary Least Square)

TAit/Ait-1 = β1 (1/Ait-1 ) + β2 (Δ Revit/Ait-1 ) + β3 (PPEit/Ait-

1 ) + e

Description :

TAit = Total accrual in period t

Ait-1 = Total asset period t-1

ΔRevit = Changes in income / net sales in period t

PPEit = Property, plant and equipment period t

β1 β2 β3 = Koefisien correllation.

c) Non accrual discretionary

NDAit = β1(1/Ait-1 ) + β2(ΔRevit/Ait-1-ΔRecit/Ait-1) +

β3(PPEit/Ait-1) + e

Description :

ΔRecit = Changes in net debt in period t

β1 β2 β3 = Fitted coefficient obtained from the regression

results in the calculation of total accrual.

d) Discretionare total accrual

DAit = TAit /Ait-1 – NDAit

52

Description :

TAit = Total accrual year t

NDAit = Non accrual discretionare in year t

2. Dependent Variable

Dependent variable is type of variables that explained or

influenced by other variables or variable expected as a result of the

independent variable (Indriantoro and Supomo, 2009:159). Dependent

variable used in this research is firm value. Tobin’s Q is used to measure

firm value. According to Ma & Tian (2009), Tobin’s Q has the advantage

of reflecting the firm’s current value and future profitability potential.

According to Vinola Herawati (2008), firm value can be measured by

Tobin Q which is formulated as :

Q = EMV + D

EBV + D

Description :

Q = Firm value

EMV = Equity Market Value

EBV = Equity Book Value

D = The book value of the total debt.

53

3. Moderating Variable

The moderating variable is the one that has strong contingent effect

on the independent variable-dependent variable relationship. That is, the

presence of a third variable (the moderating variable) modifies the original

relationship between the independent and the dependent variables

(Sekaran 2010:73).

a. Board of Directors (BOD) is fully responsible for the management of

the company effective and efficient in order to achieve the company's

goals. Therefore, According to Linck et al (2008) Board of Directors

size measured by the number of Board of Directors member in the

company.

b. Managerial ownership (MO) is the ownership by the shareholders who

have a management position in the company like directors and

commissioners. According to Setyawan, (1999) in Faisal, (2004) The

Managerial ownership measured by the total percentage of managerial

ownership in a company.

c. Institutional Ownership (IO) is ownership by the government, financial

institutions, incorporated institutions, foreign institutions, and other

institutions in a company. According to Muwaningsari (2007) stated

that the Institutional ownership is measured by the total percentage of

institutional ownership in a company.

54

Table 3.1

Summary of variable operational research

No Variable Measure Scale

1

Earnings Management Total number of board director

Ratio

2

Board of Directors

(BOD)

The total number of

board of directors

members

Rasio

3

Managerial ownership

(MO)

% of shares owned by

managerial

Rasio

4 Institutional Ownership

(IO)

% of shares owned by

institutional

Rasio

5

Firm Value

Tobin’s Q =

Rasio

55

CHAPTER IV

RESULT AND ANALYSIS

A. General Description of Research Object

This chapter presents and discusses the findings of the research. The

population of this research is real estate business listed in IDX within period

2012-2014. The selection of sample is chosen by criteria of population that

have explained in research methodology in previous chapter that is taken as

annually in 2012-2014.

In 2012-2014, Real estate business that go public in Indonesia Stock

Exchange are 50 companies. This research is used purposive sampling. And

from 50 companies, regarding on criteria of sampling in previous chapter, so

the amount of sampling are 12 companies. This research will use pooling

data method in which the variable will be tasted in three year, so the total

sample are 36 samples of annual report.

Companies that become the sample is the company that fulfill the criteria

of the sample in this research:

56

Table 4.1

Sample Selection

No.

Criteria

Number

1

Population real estate business

50

2

Real estate business that do not have institutional

ownership

(38)

Total sample of companies

12

Total sample of annual report used in this

Research

36

Source : Data Process

Table 4.2

List of Companies Sample


No Company Code

1 Agung Podomoro Land Tbk. APLN

2 Bekasi Fajar Industrial Estate Tbk. BEST

3 Bukit Darmo Property Tbk. BKDP

4 Ciputra Development Tbk. CTRA

5 MNC Land Tbk. KPIG

6 Lamicitra Nusantara Tbk. LAMI

7 Indonesia Prima Property Tbk. OMRE

8 Pudjiati Prestige Tbk. PUDP

9 Pakuwon Jati Tbk. PWON

10 Rista Bintang Mahkota Sejati Tbk. RBMS

11 Roda Vivatex Tbk. RDTX

12 Summarecon Agung Tbk. SMRA

57

B. Analysis and Discussion

The data processing in this research is conducted by the statistical

application. The application used for data processing in this research is SPSS

22.0 version.

1. Descriptive Statistics

Descriptive statistics provide an overview of the minimum value,

maximum value, average value (mean) and standard deviation of the data

used in the study.

Table 4.3

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

EM 36 -,01 ,02 ,0009 ,00603

BOD 36 2,00 9,00 5,6111 2,34555

MO 36 ,01 56,70 8,6180 15,69764

IO 36 19,18 92,88 59,1797 22,77275

TobinsQ 36 ,24 2,97 1,1526 ,67146

Size 36 24,08 30,87 27,8583 1,95453

Valid N (listwise) 36

Source : Output SPSS 22.0

Based on table 4.1 above, the variables of research can be

described as follows:

a. Dependent Variable

Variable TobinsQ has an average 1.1526. The minimum value is

.24 the name of the company is PT Pudjiati Prestige Tbk. and the

58

maximum value is 2.97 that is PT Bekasi Fajar Industrial Estate Tbk.,

where as the standard deviation value is 0.67146.

b. Independent Variable

1) Earnings Management (EM)

Variable earnings management has an average 0.0009. The

minimum value is -0.1 that is PT Rista Bintang Mahkota Sejati Tbk

and the maximum value is 0.02 that is PT Rista Bintang Mahkota

Sejati Tbk., where as the standard deviation value is .00603.

2) Board of Director (BOD)

Variable Board of Director as an average 5.6111. The

minimum value is 2.00 that is PT Bumi Serpong Damai Tbk and

the maximum value is 9.00 that is PT Agung Podomoro Land Tbk,

PT Ciputra Development Tbk and PT Summarecon Agung Tbk,

whereas the standard deviation value is 2.34555.

3) Managerial Ownership (MO)

Variable Managerial Ownership has an average 8.6180.

The minimum value is 0.01 that is PT Lamicitra Nusantara Tbk

and the maximum value is 56.70 that is PT Rista Bintang Mahkota

Sejati Tbk, whereas the standard deviation value is 15.69764.

59

4) Institutional Ownership (IO)

Variable Institutional Ownership has an average .59.1797

The minimum value is 19.18 that is PT. Rista Bintang Mahkota

Sejati Tbk and the maximum value is 92.88 that is PT Lamicitra

Nusantara Tbk, whereas the standard deviation value is 22.77275.

5) Size of Company

Variable size of company has an average 27.8583. The

minimum value is 24.08 that is PT Rista Bintang Mahkota Tbk and

the maximum value is 30.87 that is PT MNC Land Tbk, whereas

the standard deviation value is 1.95453.

2. Classical Assumtion Test

a. The Result of Normality Test

Normality Data test aims to test whether the dependent variable and

independent variables both have a normal distribution or not in the

regression model. The statistical test that can be used to test whether

the residuals are normally distributed non-parametric test statistic

Kolmogorov-Smirnov (KS) by making hypotheses :

H0: the data were normally distributed residuals

Ha: the data not normally distributed residuals.

60

If the significance value greater than 0.05 then H0 is accepted and

Ha rejected, otherwise if the significance value is less than 0.05 then

H0 rejected and Ha accepted. The results of the normality data test

using Kolmogorov-Smirnov (KS) can be shown in the following table:

Table 4.4

One-Sample Kolmogorov-Smirnov Test (Model 1)

Unstandardized Residual

N 36

Normal Parametersa,b

Mean ,0000000

Std. Deviation ,38854437

Most Extreme Differences Absolute ,147

Positive ,147

Negative -,088

Test Statistic ,147

Asymp. Sig. (2-tailed) ,048c


Table 4.5



N 36


Mean ,0000000



Positive ,123

Negative -,065

Test Statistic ,123



61

Table 4.6



N 123


Mean ,0000000



Positive ,040

Negative -,063

Test Statistic ,063

Asymp. Sig. (2-tailed) ,200c,d


Based on the results of statistical tests with models such as the

Kolmogorov-Smirnov contained in table can be seen from the

significance value of model 1 is 0.048, the significance value of

model 2 is 0.182 and the significance value of model 3 is 0.200. In

table model 1 the significance value is 0.048 that means that the data

not normally distributed because less than 0.05. But refers to the

assumption of the Central Limit Theorem Dielman (1961) in Ghozali

which states that for a large sample, especially more than 30

distribution of samples considered close to the normal distribution,

which means that even on the classic assumption test in the form of

normality test indicates that there is data distribution is not normal but

because observation of more than 30 then the data will still be

considered normal, because the use of 12 companies with 36

observation of the sample.

62

Normally distributed data can also be viewed using a normal plot

of the standardized residuals probably, the result is shown in Figure

below:

Figure 4.1 (Model 1)


63




64

Based on Figure above it can be seen that the points spread around

the diagonal line and follow the direction of a diagonal spread. Thus it

can be stated that the distribution of the data close to normal or have

met the assumptions of normality. It can also be viewed using the

histogram graph as follows:



65




66

Histogram graph showing a normal distribution pattern because the

graph does not deviate to the left or off to the right.

b. The Result of Multicollinearity Test

Multicollinearity test is used to test the existing of perfect

relationship or near-perfect relationship between the independent

variables the regression model.

Detection of multicollinearity can be seen, that if the value of

Variance Inflation Factor (VIF) of not more than 10 and the value of

tolerance is no less than 0.1, it can be said to be free of

multicollinearity. VIF values and tolerance of other research variables

can be seen from the following table.

Table 4.7

Multicollinearity Test (Model 1)

Coefficientsa

Model

Collinearity Statistics

Tolerance VIF

1 (Constant)

EM ,975 1,025

Size ,975 1,025

a. Dependent Variable: TobinsQ


67

Table 4.8


Coefficientsa

Model


Tolerance VIF

1 (Constant)

BOD ,553 1,807

MO ,382 2,617

IO ,581 1,721



Table 4.9


Coefficientsa

Model


Tolerance VIF

1 (Constant)

EM ,013 79,666

BOD ,521 1,920

MO ,187 5,361

IO ,408 2,449

Size ,392 2,551

EM_BOD ,072 13,876

EM_MO ,081 12,359

EM_IO ,045 22,053



Based on table above, it can be concluded this research There

multicollinearity problems on table 3. Where variance inflation factor

(VIF) of earning management (EM) is 79.666, board of commissioner

68

moderate (EM_BOD) is 13.876, board of director moderate (EM_MO)

is 12.359, and audit commitee moderate (EM_IO) is 22.053.

Multicollinearity in the regression model can be ignored because of

the correlation between the independent variables that occur due to the

interaction between the independent variables (Herawati, 2008).

c. The Result of Autocorrelation Test

Autocorrelation test is used to detect the internal correlation among

the groups of a series observation arrange in a series of place and time.

Based on Ghozali (2013: 111), the criteria for the assessment of the

auto correlation are:

1) If 0 < Dw < DL there is any positive autocorrelation.

2) If DL < Dw < Du or 4-Du < D < 4-DL uncertain conclusion.

3) If 0 < Dw < DL or Du < Dw < 4-Du there is no autocorrelation.

4) If 4-DL < Dw < 4 there is any negative autocorrelation.

The basic of decision making in this test are based on Durbin-

Watson Test, which can be seen in the table below:

69

Table 4.10

Autocorrelation Test (Model 1)

Model Summaryb

Model Durbin-Watson

1 2,325


From the table model 1 above, note that the value obtained for DW

2.325, Compare the values with the values of the table using 5%

significance which means including the third criteria, (Du=1.442<

Dw=2.325 < 4-Du=2.558) so it can be concluded that the regression

model 1 free from autocorrelation.

Table 4.11


Model Summaryb

Model

Durbin-Watson

1 1,863





Dw=1.863 < 4-Du=3.234) the regression model 2 there is free from

autocorrelation.

70

Table 4.12


Model Summaryb

Model Durbin-Watson

1 2,337





Dw=2.337 < 4-Du=1.925) so it can be concluded that the regression

model 3 there is little autocorrelation in region without decision. This

is possible because the explanatory variables omitted from the model

(Rahayu 2009).

d. The Result of Heteroscedasticity Test

The presence of heteroscedasticity can be seen from the graph

Scatterplot on the basis of the analysis as follows:

1) If there is a specific pattern, such as dots form a pattern of certain

existing regular (wavy, widened and then narrowed), then the

indicate has occurred heteroskedastisitas.

2) If there is a clear pattern, as well as the points spread above and

below the number 0 on the Y axis, then there is no

heteroscedasticity.

71

The result of heteroscedasticity test can be shown in the figure as

follow :

Figure 4.7


Figure 4.8


72

Figure 4.9


Based on Figure 4.3 it can be seen that the points spread below and

above the number 0 on the Y axis and does not form a specific pattern,

which means that there is no heteroscedasticity in regression models.

3. Hypotesis Testing

a. Test Coefficient of Determination ( R2)

In multiple linear regression test were analyzed also the coefficient

of determination (R2). Coefficient of determination used in this study

to see the influence of the independent variable and moderating

variable to dependent variable. Value of the correlation coefficient (R)

shows how much correlation or relationship between the independent

variables with the dependent variable. The criteria of correlation

according to Sarwono (2014: 100) are:

73

Table 4.13

Criteria of Correllation Coefficient

VALUE INFORMATION

0 No correlation between variable

> 0 – 0.25 Very weak correlation

> 0.25 – 0.5 Fairly strong correlation

> 0.5 – 0.75 Strong correlation

> 0.75 – 0.99 Very strong correlation

1 Perfectly correlation

Table 4.14

Model Summaryb

Model R R Square Adjusted R Square Std. Error of the Estimate

1 ,816a ,665 ,645 ,40015

a. Predictors: (Constant), Size, EM

b. Dependent Variable: TobinsQ


Table 4.14 shows that the correlation coefficient (R) for 0.816,

which means that the correlation between the dependent variable with

the independent variables are very strong correlation based on the

criteria correlation coefficient value ( > 0.75 – 0.99 ) is very strong

correlation. Adjusted R Square value or coefficient of determination is

equal to 0.645. This table show that earnings management variable and

size of company variable can explain 64.5% of the amount of value of

company. While 35.5% (100%-64.5%) is explained by other variables

that are not investigated in this study e.g. Loss Loan Provision (LLP),

Loan Charge-Off (LCO), Loss Loan Allowance (LLA) and other

things.

74

Table 4.15

Model Summaryb


1 ,654a ,428 ,374 ,53117

a. Predictors: (Constant), IO, BOD, MO





the independent variables are strong correlation based on the criteria

correlation coefficient value ( > 0.5 – 0.75 ) is strong correlation.

Adjusted R Square value or coefficient of determination is equal to

0.374. This table show that board of director, managerial ownership

and institutional variable can explain 37.4% of the amount of value of

company. While 62.6% (100%-37.4%) is explained by other variables

that are not investigated in this study e.g. Audit Committee, Board of

Commissioner Board of Independent and othe things.

Table 4.16

Model Summaryb


1 ,863a ,746 ,670 ,38565

a. Predictors: (Constant), EM_IO, IO, BOD, EM_MO, Size, EM_BOD, MO, EM





75

the independent variables are very strong correllation based on the

criteria correlation coefficient value ( > 0.75 – 0.99 ) is very strong

correlation. Adjusted R Square value or coefficient of determination is

equal to 0.670. This table show that earnings management, size of

company, and earnings management that moderate with board of

director, managerial ownership and institutional ownership variable

can explain 67% of the amount of value of company. While 33%

(100% - 67%) is explained by other variables that are not investigated

in this study e.g. Audit Committee, Board of Commissioner, Board of

Independent and othe things.

b. Multiple Regression Analysis

This research show that the effect of earnings management and

good corporate governance indicator on company performance

(TobinsQ). Here is the result of multiple regression analysis :

Table 4.17

Multiple Regression Analysis (Model 1)

Coefficientsa

Model

Unstandardized Coefficients

B Std. Error

1 (Constant) -6,738 ,977

EM -14,085 11,348

Size ,284 ,035



76

From table 4.17 above stated that the Earnings Management (EM)

negatively affect the company value (TobinsQ) and size of company

positively affect the company value (TobinsQ). It can be seen the

relation between Earnings Management (EM), and size of company to

company value (TobinsQ) as follow :

TobinsQ = -6.738 - 14.085 + 0.284Size + e

From the multiple linear regression equation above, it can be

explained for each variable as follow :

1) Constant at -6.738 units stated that if there is effect or unchanged

in X1 and X2 (EM and SIZE) then the value of company value will

be -6.738.

2) Regression coefficient of variable X1 (EM) -14.085 it shows that

the effect of earnings management on the company value is

negative or opposite direction, which means that if the value of the

earnings management variables change increased by one point,

then the value of company performance will decrease by -14.085,

with assumption other independent variables remain or unchanged.

3) Regression coefficient of variable X2 (SIZE) 0.284 it shows that

the effect of size of company on the company value is positive or

parallel, which means that if the value of the size of the company

variables change increased by one point, then the value of

77

company value will increase 0.284, with assumption other

independent variables remain or unchanged.

Table 4.18


Coefficientsa

Model


B Std. Error

1 (Constant) 2,956 ,568

BOD -,117 ,051

MO -,043 ,009

IO -,013 ,005



From table 4.18 above stated that the board of director (BOD),

managerial ownership (MO), and institutional ownership (IO)

negatively affect the company value (TobinsQ). It can be seen the

relation between board of director (BOD), managerial ownership

(MO), and institutional ownership (IO) to company value (TobinsQ) as

follow :

TobinsQ = 2.956 - 0.117BOD - 0.043MO - 0.013IO+ e



1) Constant at 2.956 units stated that if there is effect or unchanged in

X3, X4 and X5 (BOD, MO and IO) then the value of company

value will be 2.956.

78

2) Regression coefficient of variable X3 (BOD) -0.117 it shows that

the effect of board of director on the company value is negative or

opposite direction, which means that if the value of the board of

director variables change increased by one point, then the value of

company value will decrease by -0.117, with assumption other


3) Regression coefficient of variable X4 (MO) -0.043 it shows that

the effect of board of director on the company value is negative or

opposite direction, which means that if the value of the of

managerial ownership variables change increased by one point,

then the value of company value will decrease by -0.043, with

assumption other independent variables remain or unchanged.

4) Regression coefficient of variable X5 (IO) -0.013 it shows that the

effect of institution ownership on the company value is negative or

opposite direction, which means that if the value of the institution

ownership variables change increased by one point, then the value

of company performance will decrease by -0.013, with assumption

other independent variables remain or unchanged.

79

Table 4.19


Coefficientsa

Model


B Std. Error

1 (Constant) -6,329 1,737

EM -131,775 96,411

BOD -,081 ,039

MO -,009 ,010

IO -,003 ,004

Size ,293 ,053

EM_BOD 10,085 7,338

EM_MO 1,709 1,176

EM_IO ,789 ,956



From table 4.19 above stated that the board of director moderate on

earnings management (EM_BOD), managerial ownership moderate on

earnings management (EM_MO) and institutional ownership moderate

on earnings management (EM_IO) positively affect the company

value. It can be seen the relation between board of director moderate

on earnings management (EM_BOD), managerial ownership moderate

on earnings management (EM_MO) and institutional ownership

moderate on earnings management (EM_IO) to company value

(TobinsQ) as follow :

TobinsQ = -6.329 + 10.085EM_BOD + 1.709EM_MO -

0.789EM_IO + e

80



1) Regression coefficient of variable X6 (EM_BOD) 10.085 it shows

that the effect of board of director moderate on earnings

management on the company value is positive or paraller, which

means that if the value of the board of director moderate on

earnings management variables change increased by one point,

then the value of company value will increase by 10.085, with

assumption other independent variables remain or unchanged.

2) Regression coefficient of variable X7 (EM_MO) 1.709 it shows

that the effect of managerial ownership moderate on earnings


means that if the value of the of managerial ownership moderate

variables change increased by one point, then the value of

company value will increase by 1.709, with assumption other


3) Regression coefficient of variable X8 (EM_IO) 0.789 it shows that

the effect of institutional ownership moderate on earnings


means that if the value of the institutional ownership variables

change increased by one point, then the value of company

81

performance will increase by 0.789, with assumption other


c. Simultaneous Significant Test (F-Test)

The F test of hypothesis testing is used to see whether the overall

independent variables have a significant effect on the dependent

variable. From the test results simultaneously obtained as follows:

Table 4.20

Simultaneous Significant Test (Model 1)

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 10,496 2 5,248 32,777 ,000b

Residual 5,284 33 ,160

Total 15,780 35


b. Predictors: (Constant), Size, EM


From the table 4.20, the results of the calculation of the F test

statistic is 32.777 with probability 0.000. Because the probability is

smaller than 0.05, which means regression model can use to predict

company value or earnings management (EM and size of company

variables significant and simultaneously effect to company value

(TobinsQ).

82

Table 4.21


ANOVAa


1 Regression 6,751 3 2,250 7,976 ,000b

Residual 9,029 32 ,282

Total 15,780 35


b. Predictors: (Constant), IO, BOD, MO





company value or board of director (BOD), managerial ownership

(MO) and institutional ownership variables significant and

simultaneously effect to company value (TobinsQ).

Table 4.22


ANOVAa

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 11,764 8 1,471 9,888 ,000b

Residual 4,016 27 ,149

Total 15,780 35


b. Predictors: (Constant), EM_IO, IO, BOD, EM_MO, Size, EM_BOD, MO, EM





83

company value or board of director moderate on earnings management

(EM_BOD), managerial ownership (EM_MO) moderate on earnings

management and institutional ownership (EM_IO) moderate on

earnings management (EM_AC) variables significant and

simultaneously effect to company value (TobinsQ).

d. Significant Partial Test (T-Test)

Statistical t-test performed to further investigate which of the

independent variables in influencing the dependent variable. The

hypothesis that will be tested as follows:

Table 4.23

Partial Test Result (Model 1)

Coefficientsa

Model

Unstandardized Coefficients Standardized Coefficients

t Sig. B Std. Error Beta

1 (Constant) -6,738 ,977 -6,898 ,000

EM -14,085 11,348 -,127 -1,241 ,223

Size ,284 ,035 ,826 8,096 ,000



84

Table 4.24


Coefficientsa

Model



1 (Constant) 2,956 ,568 5,201 ,000

BOD -,117 ,051 -,409 -2,273 ,030

MO -,043 ,009 -1,016 -4,697 ,000

IO -,013 ,005 -,443 -2,525 ,017



By Seeing Table above, the results of significant test partial (T-Test)

are as follows:

1) Earnings Management Variable

Earnings management on table 4.23 has a significant level

0.223 greater than the significant standard level 0.05.

Coefficient regression for earnings management is -14.085

which shows a negative direction to company value that

indicate if earnings management change increased by one

point, then the fim value will decrease by -14.085. This

describe that earnings management have negative effect not

significant on company value.

Earnings management is the management's efforts to change

the financial statements aimed at misleading the shareholders

who want to know the performance of the company or to

influence contractual outcomes that rely on accounting

85

numbers that report. Nonetheless, as an earnings management

action to increase or decrease profit by selecting accounting

policies by management that are subjective, then the earnings

management, especially in the long run will reduce the firm

value.

Based on agency theory that an agency relationship may create

conflicts of interest between the owner and the manager.

contract made with the hope to minimize conflicts of interest.

The results of this study found that earnings management

actions carried out by the manager would not give a favorable

reaction that will have an impact on increasing the firm value

that reflected in the company's stock price. So, when the goal

that owned by manager and investor are different the agency

conflict cannot be avoided in the company. The management

will be detrimental to the owners of capital to behave

unethically in conducting the accounting fraud. Agency

conflicts that occur within a company can have an impact on

the quality of the profit generated, it is because the managers

will act opportunistic. Earnings are opportunistic certainly be

detrimental to some parties who have a low quality will not

represent the information that actually represent. Thus earnings

are low-quality highly detrimental to the investors and the

86

company will alsodeprimental because it is related to the firm

value that reflected in the price of shares traded.

The results of this study are consistent with research by

Herawaty (2008), Pamungkas (2012), and Kamil (2014) that

state earnings management negatively affect the firm value.

2) Size of Company Variable

Size of company has a significant level 0.000 smaller than the

significant standard level 0.05. Coefficient regression for size

of company is 0.284 which shows positive direction to

company value that indicate if size of company change

increased by one point, then the value of company performance

will decrease by 0.284. This describe that size of company had

a significant effect on company performance. The results of

this study are consistent with research by Herawaty (2008) that

state the size of the company has a positive influence on the

value of the company, the larger the company the greater the

value of the company.

3) Board of Director Variable

Board of commissioner has a significant level 0.030 greater

than the significant standard level 0.05. Coefficient regression

for board of director is -0.117 which shows a negative direction

to company value that indicate if board of director change


87

will decrease by -0.117 . This describe that board of director

have negative effect significant on company value. The

company has a large of board of director size cannot do the

coordination, communication, and decision-making better than

the company that has a smaller board of director. The results of

this study are consistent with research by Febriyanto (2013),

Amyulianthy (2012), Dalton et.al.(1999) find the effect

between Board of Directors size and company performance.

4) Managerial Ownership Variable

Board of director has a significant level 0.000 smaller than the

significant standard level 0.05. Coefficient regression for

managerial ownership is -0.043 which shows a negative

direction to company value. This describe that board of director

have negative effect significant on company value. That

indicate if board of director change increased by one point,

then the value of company performance will decrease by -

0.043. Managerial ownership is a mechanism to reduce agency

problems of managers, by aligning the interests of managers

and shareholders (Jensen and Meckling, 1976 in Herawaty,

2008). Thus, if the manager is expected to have the company's

shares are high, is expected to improve the company's

performance as a manager will be more motivated to improve

their performance as a result of reciprocity will be accepted the

88

manager will increase with the improved performance of the

company which will increase the stock price and the value of

the company. However, Siswantaya (2007) argues when

managerial ownership of a company is too high, it will cause

security problems. This means that if the managerial ownership

is too high, the manager will have a strong position in

controlling the company, and external parties will find it

difficult to control the actions of managers. The results of this

study are consistent with research by Siallagan and Machfoedz

(2006) and Kamil (2014) that state managerial ownership is

statistically negative effect on firm value.

5) Institutional Ownership Variable

Institutional ownership has a significant level 0.017 smaller


for board of commissioner is -0.013 which shows a negative

direction to company value. This describe that institutional

ownership had negative effect significant on company

performance. That indicate if institutional ownership change


will decrease by -0.013. The majority owner of the institution

involved in the control of companies that tend to act in their

own interests although sacrifice the minority owners so in long

term can make the firm value will be decrease. The results of

89

this study are consistent with research by Sudarma (2003),

Sujoko and Soebiantoro (2007) that found that institutional

ownership have negative effect to company value. This result

contrast with Kamil (2014) that state institutional ownership

have positive significant effect to firm value.

a. Moderate Regression Analysis

Table 4.25


Coefficientsa

Model



1 (Constant) -6,329 1,737 -3,643 ,001

EM -131,775 96,411 -1,184 -1,367 ,183

BOD -,081 ,039 -,284 -2,108 ,044

MO -,009 ,010 -,205 -,912 ,370

IO -,003 ,004 -,088 -,579 ,567

Size ,293 ,053 ,854 5,509 ,000

EM_BOD 10,085 7,338 ,497 1,374 ,181

EM_MO 1,709 1,176 ,496 1,454 ,158

EM_IO ,789 ,956 ,376 ,825 ,417



1) Board of director moderate Variable

Board of director moderate has a significant level 0.181 greater


for board of director moderate is 10.085 which shows a

positive direction to company value. This describe that board of

90

director have positive effect significant on company value.

That indicate if board of director moderate change increased by

one point, then the value of company performance will increase

by 10.085. The result show that earnings management to firm

value weakens by board of director as moderating variable.

2) Managerial Ownership moderate Variable

Managerial ownership moderate has a significant level 0.158

greater than the significant standard level 0.05. Coefficient

regression for board of director moderate is 1.709 which shows

a positive direction to firm value. This describe that managerial

ownership have positive effect significant on company value.

That indicate if managerial ownership change increased by one

point, then the value of company performance will increase by

1.709. The result show that earnings management to firm value

weakens by managerial ownership as moderating variable.

3) Institutional Ownership moderate Variable

Institutional ownership moderate has a significant level 0.417

greater than the significant standard level 0.05. Coefficient

regression for board of director moderate is 0.789 which shows

positive direction to company value. This describe that

institutional ownership moderate have positive effect not

significant on company value. That indicate if institutional

ownership moderate change increased by one point, then the

91

firm value will increase by 0.789. The result show that

earnings management to firm value weakens by institutional

ownership as moderating variable. The results of this study

reinforce previous research by Herawaty (2008) and the

Dervish (2010) which states that the Institutional Ownership

has a positive influence on the relationship between earnings

management with firm values.

92

CHAPTER V

CONCLUSION AND RECOMMENDATION

A. Conclusion

The purpose of this research is to find out the influence of earnings

management to firm value and board of director (BOD) managerial ownership

(MO) and institutional ownership (IO) as moderating variable in real estate

and properties company listed on the Indonesia Stock Exchange from the

period 2012 until 2014. Based on test results with three regression models

found the conclusions are as follows:

1. Based on significant partial test (T-Test), Earnings management (EM) do

not have significant influence to the firm value with coefficient regresion

negative that shows earnings management can decrease the company

value. While size of company have significant effect to the firm value with

coefficient positive that show larger the company the greater the firm

value.

2. Based on significant partial test (T-Test), board of director as moderating

do not have significant effect to the firm value with coefficient positive

that show corporate governance especially board of director have positive

effect as moderating on firm value.

3. Based on significant partial test (T-Test), managerial ownership as

moderating do not have significant effect to the firm value with

93

coefficient positive that show corporate governance especially

mannagerial ownership have positive effect as moderating on firm value.

4. Based on significant partial test (T-Test), institutional ownership as

moderating do not have significant effect to the firm value with

coefficient positive that show corporate governance especially institutional

ownership have positive effect as moderating on firm value.

B. Recommendation

1. Measurement of corporate governance mechanism in this study only use

board of directors managerial ownership and institutional ownership. It is

expected to further research can add measurement variable corporate

governance mechanisms, such as managerial ownership and institutional

ownership.

2. Measurement of earning management mechanism in this study only use

Disretionare accrual. It is expected to further research can add

measurement variable earnings management mechanisms, such as Loss

Loan Provision and Loss Loan Allowance.

3. The study period was relatively short, lasting only three years. So it may

not be able to feel the impact of corporate governance mechanisms.

Researchers further suggested using a longer study period so that it can be

felt the impact of corporate governance mechanisms.

4. Sample companies in this study was relatively small. It is hoped further

research using larger sample, such as all companies listed in Indonesia

Stock Exchange.

95

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101

APPENDIX I

List of Data

CODE YEARS EM BOD MO IO TOBINSQ SIZE

APLN 2012 -0,00490449 9 3,098 67,04 1,081346 29,65719

ASRI 2012 0,002904854 5 0 46,99 1,644756 30,09824

BAPA 2012 -0,019891111 3 0 69,92 1,619373 25,94908

BCIP 2012 0,008138418 5 0 52,43 1,482623 26,60234

BEST 2012 -0,008829355 3 0,07 74,7 2,96969 29,46717

BIPP 2012 0,00538633 3 0 54,58 1,604334 25,98328

BKDP 2012 -0,004684359 4 15,72 42,16 0,993258 27,19053

BKSL 2012 -0,002254306 9 0 48,35 1,1816 29,41172

BSDE 2012 -0,000412214 10 0 63,12 1,530531 30,59741

COWL 2012 -0,001047393 3 0 94,74 0,754114 27,26945

CTRA 2012 0,013636843 9 0,204 30,63 1,539307 30,12692

CTRP 2012 0,014174424 8 0 57,93 1,004693 28,95318

CTRS 2012 -0,00312106 8 0 62,66 1,505365 29,12447

DART 2012 0,010489387 5 0 89,66 0,895122 28,50125

DILD 2012 -0,000497022 8 0 42,13 0,921472 28,87591

DUTI 2012 -0,000350639 9 0 88,56 1,073842 29,36135

EMDE 2012 0,003177865 4 7,86 71,86 0,938019 26,87387

FMII 2012 -0,004894797 4 0 87,87 2,173737 27,22552

GAMA 2012 -0,008217771 3 0 60 3,005691 28,88428

GMTD 2012 -0,001994296 6 0 65 0,814585 24,92818

GPRA 2012 0,007552295 3 0 84,75 1,214209 27,6146

GWSA 2012 0,000385862 4 0 79,49 1,031694 28,17111

JRPT 2012 0,002215083 5 0 79,12 8,533334 31,31677

KIJA 2012 0,003508067 4 0 17525 0,998301 29,00812

KPIG 2012 0,000122139 5 8,13 51,95 1,953185 29,20229

LAMI 2012 7,82278E-06 7 0,01 92,88 0,894616 26,23229

LCGP 2012 0,007734602 3 0,17 23,77 1,343263 26,20088

LPCK 2012 0,000793755 5 0 42,2 1,38338 28,47009

LPKR 2012 0,003115273 8 0 18,12 1,466753 30,76989

MDLN 2012 0,010563938 4 0 41,15 1,347691 28,97195

MTSM 2012 0,00171226 2 0 82 1,731769 25,81698

OMRE 2012 -0,003936961 6 0,07 90,43 1,054743 27,09415

PLIN 2012 0,000451423 5 0 88,84 1,890754 29,38039

PUDP 2012 -0,000158817 2 26,91 59,64 0,295983 25,76022

PWON 2012 0,006311819 6 0,03 70,39 2,017831 30,01389

RBMS 2012 -0,000676584 3 50,31 19,18 0,366531 24,56747

RDTX 2012 0,008255257 4 1,03 75,23 0,989753 27,57

102


RODA 2012 -0,004681279 5 0 68,9 2,232328 29,10798

SCBD 2012 0,014063414 4 0,001 82,41 3,053914 29,93023

SMDM 2012 0,000133007 4 0 87,09 0,542146 27,53308

SMRA 2012 -0,003944584 7 0,28 41,82 0,6769 26,43024

APLN 2013 -0,005334339 9 3,092 67,04 0,857468 29,11437

ASRI 2013 0,001804637 5 0 51,8 1,216069 29,7651

BAPA 2013 -0,002406326 3 0 70,37 0,976219 25,20426

BCIP 2013 -0,005191997 5 0 52,43 2,001332 27,20118

BEST 2013 0,009546985 4 0,07 61,39 1,538083 29,08612

BIPP 2013 -0,004761765 3 0 66,35 0,904721 26,33238

BKDP 2013 -0,003863017 4 15,72 42,16 0,993556 27,09522

BKSL 2013 0,008663516 6 0 41,58 0,817122 29,22622

BSDE 2013 0,001183857 9 0 63,12 1,405625 30,74769

COWL 2013 -0,003476297 2 0 93,5 1,569118 28,45934

CTRA 2013 0,003355043 8 0,206 30,63 1,335009 30,11434

CTRP 2013 -0,004492041 8 0 58,04 1,026975 29,07641

CTRS 2013 -0,001963029 8 0 62,66 1,304825 29,07901

DART 2013 -4,97123E-05 5 0 89,66 0,679401 27,96601

DILD 2013 -0,003170672 8 0 42,13 0,889616 28,81436

DUTI 2013 0,000414752 7 0 88,56 1,298879 29,74471

EMDE 2013 0,010832682 4 0 74,22 0,905234 26,87387

FMII 2013 0,001745928 4 0 87,87 2,777266 27,67751

GAMA 2013 0,007466492 3 0 59,92 0,966437 27,63205

GMTD 2013 0,001343291 5 0 65 1,335829 27,45995

GPRA 2013 -0,001155325 3 0 84,75 0,883622 27,1938

GWSA 2013 -0,006261095 4 0,04 79,49 0,72897 27,84639

JRPT 2013 0,000515213 5 0 75,95 2,276839 29,98743

KIJA 2013 0,005043188 5 0 19,967 0,963343 28,98774

KPIG 2013 0,001094153 6 0,37 82,58 1,006633 29,44685

LAMI 2013 -0,000194913 7 0,01 92,88 0,746184 26,0378

LCGP 2013 -0,000112268 3 0 63,89 1,01907 28,13877

LPCK 2013 0,000763251 4 0 42,2 1,408367 28,85274

LPKR 2013 0,002283646 6 0 18,12 1,217971 30,67558

MDLN 2013 0,00454675 4 0 36,91 1,021994 29,21778

MTSM 2013 -0,003348072 3 0 80,95 1,795814 25,80259

OMRE 2013 -3,91451E-05 7 0,07 90,43 1,066988 27,10897

PLIN 2013 0,000660173 5 0 89,07 2,128294 29,55029

PUDP 2013 -0,000625419 2 26,91 59,64 0,244356 25,78706

PWON 2013 0,000911435 7 0,03 52,19 1,957102 30,19621

RBMS 2013 -0,01262748 3 50,36 19,2 0,371176 24,11548

103


RDTX 2013 -0,008281308 3 1,27 81,74 1,109611 27,90647

RODA 2013 -0,008252833 5 0 68,31 2,597808 29,442

SCBD 2013 0,030572384 5 0 82,41 1,842182 29,82487

SMDM 2013 6,88932E-05 4 0 89,16 0,43822 26,91103

SMRA 2013 0,002043967 9 0,28 41,82 0,678208 26,29409

APLN 2014 0,008876925 8 3,098 67,04 0,932658 29,55787

ASRI 2014 2,07727E-05 5 0 51,48 1,273716 30,02925

BAPA 2014 0,006849925 3 0,13 76,89 0,829946 24,96585

BCIP 2014 0,000484193 4 0 58,02 2,44124 27,72727

BEST 2014 -8,36305E-05 3 0,07 57,96 2,147466 29,5828

BIPP 2014 0,001735348 3 0 66,35 0,733286 26,38644

BKDP 2014 -0,000306895 4 15,72 42,16 1,143546 27,29816

BKSL 2014 0,00496443 6 0 41,58 0,699313 28,81437

BSDE 2014 -4,53579E-05 9 0 64,88 1,522051 31,1324

COWL 2014 0,006785416 3 0 93,32 1,460712 28,74436

CTRA 2014 0,00481206 8 0,2 30,63 1,681435 30,65387

CTRP 2014 0,006694097 9 0 58,04 1,105738 29,27905

CTRS 2014 -9,99415E-05 9 0 62,66 1,463785 29,39873

DART 2014 -0,000375533 4 0 89,66 0,782827 28,39002

DILD 2014 -0,006021626 8 0 42,13 1,251823 29,53876

DUTI 2014 -0,000127599 8 0 88,56 1,346395 29,83135

EMDE 2014 0,006016074 4 0 74,22 0,877852 26,85221

FMII 2014 -0,00214124 4 0 87,87 3,037036 27,83129

GAMA 2014 0,004000424 2 0 59,92 0,495899 26,69166

GMTD 2014 -0,001615998 5 0 65 0,96922 27,15199

GPRA 2014 0,007066526 3 0 83,59 1,058954 27,61024

GWSA 2014 0,006270568 4 0,04 79,49 0,732136 27,93654

JRPT 2014 0,000176624 5 0 79,61 2,569547 30,24792

KIJA 2014 0,001281048 5 0 19,967 1,153737 29,41767

KPIG 2014 0,000766604 7 1,64 53,32 2,760724 30,8722

LAMI 2014 0,000115583 7 0,01 92,88 0,876844 26,48927

LCGP 2014 -1,55267E-05 3 0 39,64 2,0819 28,88321

LPCK 2014 -0,000593912 4 0 42,2 2,059658 29,61042

LPKR 2014 0,000299122 7 0 23,44 1,156067 30,78969

MDLN 2014 0,003178865 4 0 35,96 1,113535 29,50547

MTSM 2014 0,000721292 3 0 80,95 1,857704 25,80259

OMRE 2014 0,00482259 7 0,07 90,43 0,936247 27,10897

PLIN 2014 0,001811927 6 0 89,46 3,408258 30,21972

PUDP 2014 -0,000687396 2 26,91 59,64 0,282847 25,70231

PWON 2014 0,000643141 7 0,03 57,61 1,984986 30,84195

104


RBMS 2014 0,016857195 3 56,7 19,18 0,323611 24,08196

RDTX 2014 0,007735484 3 1,27 84,19 1,036159 27,97546

RODA 2014 0,001892163 5 0 68,31 1,733482 29,1022

SCBD 2014 -0,000368867 6 0 82,53 1,484124 29,52476

SMDM 2014 1,34633E-05 4 0 95,18 0,513745 27,23482

SMRA 2014 0,001877191 9 0,28 37,68 0,649241 27,11741


Table 4.2

List of Companies Sample


No Company Code

1 Agung Podomoro Land Tbk. APLN

2 Bekasi Fajar Industrial Estate Tbk. BEST

3 Bukit Darmo Property Tbk. BKDP

4 Ciputra Development Tbk. CTRA

5 MNC Land Tbk. KPIG

6 Lamicitra Nusantara Tbk. LAMI

7 Indonesia Prima Property Tbk. OMRE

8 Pudjiati Prestige Tbk. PUDP

9 Pakuwon Jati Tbk. PWON

10 Rista Bintang Mahkota Sejati Tbk. RBMS

11 Roda Vivatex Tbk. RDTX

12 Summarecon Agung Tbk. SMRA

105

APPENDIX II

Table 4.3

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

EM 36 -,01 ,02 ,0009 ,00603

BOD 36 2,00 9,00 5,6111 2,34555

MO 36 ,01 56,70 8,6180 15,69764

IO 36 19,18 92,88 59,1797 22,77275

TobinsQ 36 ,24 2,97 1,1526 ,67146

Size 36 24,08 30,87 27,8583 1,95453

Valid N (listwise) 36


Table 4.4



N 36


Mean ,0000000



Positive ,147

Negative -,088

Test Statistic ,147



Table 4.5



N 36


Mean ,0000000



Positive ,123

Negative -,065

Test Statistic ,123



106

Table 4.6



N 123


Mean ,0000000



Positive ,040

Negative -,063

Test Statistic ,063

Asymp. Sig. (2-tailed) ,200c,d


Figure 4.1


107

Figure 4.2

Figure 4.3


108




109



Table 4.7


Coefficientsa

Model


Tolerance VIF

1 (Constant)

EM ,975 1,025

Size ,975 1,025



110

Table 4.8


Coefficientsa

Model


Tolerance VIF

1 (Constant)

BOD ,553 1,807

MO ,382 2,617

IO ,581 1,721



Table 4.9


Coefficientsa

Model


Tolerance VIF

1 (Constant)

EM ,013 79,666

BOD ,521 1,920

MO ,187 5,361

IO ,408 2,449

Size ,392 2,551

EM_BOD ,072 13,876

EM_MO ,081 12,359

EM_IO ,045 22,053



Table 4.10


Model Summaryb

Model Durbin-Watson

1 2,325


111

Table 4.11


Model Summaryb

Model

Durbin-Watson

1 1,863


Table 4.12


Model Summaryb

Model Durbin-Watson

1 2,337


Figure 4.7

Source : SPSS 22.0

112

Figure 4.8

Source : SPSS 22.0

Figure 4.9

Source : SPSS 22.0

113

Table 4.13

Criteria of Correllation Coefficient

VALUE INFORMATION

0 No correlation between variable

> 0 – 0.25 Very weak correlation

> 0.25 – 0.5 Fairly strong correlation

> 0.5 – 0.75 Strong correlation

> 0.75 – 0.99 Very strong correlation

1 Perfectly correlation

Table 4.14

Model Summaryb


1 ,816a ,665 ,645 ,40015

a. Predictors: (Constant), Size, EM



Table 4.15

Model Summaryb


1 ,654a ,428 ,374 ,53117

a. Predictors: (Constant), IO, BOD, MO



Table 4.16

Model Summaryb


1 ,863a ,746 ,670 ,38565

a. Predictors: (Constant), EM_IO, IO, BOD, EM_MO, Size, EM_BOD, MO, EM



114

Table 4.17


Coefficientsa

Model


B Std. Error

1 (Constant) -6,738 ,977

EM -14,085 11,348

Size ,284 ,035


Table 4.18


Coefficientsa

Model


B Std. Error

1 (Constant) 2,956 ,568

BOD -,117 ,051

MO -,043 ,009

IO -,013 ,005


Table 4.19


Coefficientsa

Model


B Std. Error

1 (Constant) -6,329 1,737

EM -131,775 96,411

BOD -,081 ,039

MO -,009 ,010

IO -,003 ,004

Size ,293 ,053

EM_BOD 10,085 7,338

EM_MO 1,709 1,176

EM_IO ,789 ,956


115

Table 4.20


ANOVAa


1 Regression 10,496 2 5,248 32,777 ,000b

Residual 5,284 33 ,160

Total 15,780 35


b. Predictors: (Constant), Size, EM


Table 4.21


ANOVAa


1 Regression 6,751 3 2,250 7,976 ,000b

Residual 9,029 32 ,282

Total 15,780 35


b. Predictors: (Constant), IO, BOD, MO


Table 4.22


ANOVAa

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 11,764 8 1,471 9,888 ,000b

Residual 4,016 27 ,149

Total 15,780 35


b. Predictors: (Constant), EM_IO, IO, BOD, EM_MO, Size, EM_BOD, MO, EM


116

Table 4.23


Coefficientsa

Model



1 (Constant) -6,738 ,977 -6,898 ,000

EM -14,085 11,348 -,127 -1,241 ,223

Size ,284 ,035 ,826 8,096 ,000



Table 4.24


Coefficientsa

Model



1 (Constant) 2,956 ,568 5,201 ,000

BOD -,117 ,051 -,409 -2,273 ,030

MO -,043 ,009 -1,016 -4,697 ,000

IO -,013 ,005 -,443 -2,525 ,017



117

Table 4.25


Coefficientsa

Model



1 (Constant) -6,329 1,737 -3,643 ,001

EM -131,775 96,411 -1,184 -1,367 ,183

BOD -,081 ,039 -,284 -2,108 ,044

MO -,009 ,010 -,205 -,912 ,370

IO -,003 ,004 -,088 -,579 ,567

Size ,293 ,053 ,854 5,509 ,000

EM_BOD 10,085 7,338 ,497 1,374 ,181

EM_MO 1,709 1,176 ,496 1,454 ,158

EM_IO ,789 ,956 ,376 ,825 ,417



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