PENGARUH UKURAN PERUSAHAAN DAN PRAKTIK CORPORATE GOVERNANCE TERHADAP MANAJEMEN LABA

Agency theory arises when the owner (principal) hired management (agent) to provide a service and then delegate decision-making authority to the agent. When management has more company's internal information than the external parties, then there is asymmetry of information, where information asymmetry is more favorable to management. Misalignment of interests between the principal and agent caused a measure of earnings management. Earnings management can be efficient (improving keinformatifan earnings) are also opportunist (maximizing self-interest). Factors affecting the action of earnings management are company size and corporate governance practices. This study aimed to examine the effect of the independent variables on earnings management. The independent variable is the firm size, and corporate governance practices that include the managerial ownership, proportion of independent commissioners, reputation of the public accounting firm, and the existence of the audit committee. Object of this re-search is all the manufacturing companies listed on the Indonesia Stock Exchange in the year 2007- 2011. The sample used in this study were 56 companies selected by purposive sampling technique. Data analysis was performed by linear regression analysis. The results showed that the firm size, managerial ownership and the proportion of independent commissioners have significant negatively affect on earnings management, while the reputation of the public accounting firm and the existence of the audit committee did not significant negatively effect on earnings management