Resumen de Earnings Management and Characteristics of Female Directors: The Case of Building Construction Company

Meita Sekar Sari, Agus Ismaya Hasanudin, Imam Abu Hanifah, Agus Sholikhan Yulianto

• Purpose: Financial performance is the main standard in a company. This study aims to analyze the influence of Characteristics of Female Directors which investigates the relationship between the presence of female directors on corporate boards and management earnings, with a special focus on the specific attributes of female directors on financial performance and analyzing earnings management on financial performance.

    Theoretical framework:  Gender Diversity, Director Affiliation, Director Characteristics, female directors and earnings management as independent variables, while financial performance with ROA as the dependent variable.

    Design/methodology/approach:   The control variable are ROE, leverage, directors, block owners, family dummy, and size board. Earnings management is measured by Discretionary Accruals Net Profit - Cash and Cash Equivalents/Total Assets t-1) and financial performance using ROA (Return On Assets). The data used in this research is secondary data. The total population used in this study were 17 building construction sub-sector companies listed on the Indonesia Stock Exchange. The data collection technique in this study was purposive sampling and data were obtained from 8 companies. The analytical method uses the classical assumption test, multiple linear regression test, test the coefficient of determination, and test the hypothesis.

    Findings: Based on the results of the study it can be concluded that the presence of female directors on company boards is not related to profit management. Similar results were obtained for the percentage of female directors with certain attributes such as busyness, expertise professionals, and audit committee membership. Surprisingly, the results show that there is a negative (positive) relationship between the percentage of affiliated (unaffiliated) female directors with controlling business groups and management profit. Simultaneously significant effect on ROA. Partially, Gender Diversity, Director Affiliation, Director Characteristics, female directors and earnings management each have an effect on ROA.

    Research, Practical & Social implications:   In further research, in order to conduct a broader research with other objects. The research is expected to be used for all companies.

    Originality/value:  The authors declare no potential conflicts of interest with respect to the research, authorship, and publication of this article.