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management will be decreased by 0.056, and
vice versa, assuming other variables held
constant. This variable has a p value of 0.011
indicates that significant at the 5% level.
d. The regression coefficient firm size (FSIZE) of
0.001 and has a positive influence on earnings
management. H al indicates if the firm
size (FSIZE) increased by one, then earnings
management will increase by 0,001, and vice
versa, assuming other variables held
constant. This variable has a p value of 0.523
indicates that it is not significant.
e. Regression coefficient value return on
assets (ROA) of 0,302 and has a positive
influence on earnings management. H al
indicate if the return on assets (ROA) increased
by one, then earnings management increased by
0,302, and vice versa, assuming other variables
held constant. This variable has a p value of
0.010 indicates that significant at the 1% level.
f. The regression coefficient of leverage (LEV)
amounted to - 0.001 and has a negative effect on
earnings management. H al indicate
if leverage (LEV) increased by one, then
earnings management decreased by 0,001, and
vice versa, assuming other variables held
constant. This variable has a p value of 0.976
indicates that it is not significant.
6 DISCUSSION
6.1 Influence of Board Gender
Diversity to Earning Management
The results showed that board’s gender diversity has
negative and insignificant effect to earnings
management. This is because the directors with
female gender would avoid the risk caused by these
opportunistic actions and agency problems between
agents and principals. This has resulted in the
directors with female gender to avoid aggressive
earnings management practices in accounting
policies.
However, companies having male director seeks
to avoid the practices of earnings management. This
is because the board of directors with the male gender
more have the ability to run operations thoroughly, so
that practices such as the manipulation of earnings
management can be minimized. Due to the similarity
of standpoint, gender alone is not enough to predict
the actions of management. According to research
conducted by Peni and Vahama (2016), it can be
inferred that the presence of female CEO or CFO
women will reduce the level of earnings management.
6.2 Influence of Board Nationality
Diversity to Earning Management
The results shows that nationality and diversity of
board of directors have insignificant and negative
effect on the earnings management. The result
indicate that diverse nationality of board of directors
may reduce earnings management. Furthermore,
heterogeneous group provides diverse ideas and
knowledge from wide range of perspective leading
towards more constructive discussion which is useful
for board’s dynamic within the firms. The
composition of the board of directors which entails
different backgrounds of individuals can improve and
maintain management’s credibility, mitigating the
incentives to engage in earnings management
practices.
Sander van den Berg (2015) in his research
develop a hypothesis that diverse nationality has
significant negative effect on earnings management
yet, the study finds that nationality has positive effect
on earnings management which means that the
previous hypothesis is rejected.
6.3 Influence of Board Education
Diversity to Earning Management
The board diverse education background proven to
have significant and negative effect on earnings
management which translate into the reduction of
earnings management. The more members of the
board who have higher secondary education, the
lower the level of earnings management. So the
diversity of educational backgrounds and experiences
are important to the composition of the board as a
whole, because ultimately affect earnings
management in the company. The results of the study
concurs with research conducted by Rashidah and
Fairuzana (2006) shows that the competence of the
audit committee members has a negative correlation
with earnings management (dicreationary accrual).
REFERENCES
Burke, R. J. and M. C. Mattis: 2000, ‘Women Corporate
Boards of Directors: Where Do We Go from Here?’, in
R. J. Burke and M. C. Mattis (eds.), Women on
Corporate Boards of Directors (Kluwer Academic
Publishers, The Netherlands), pp. 3–10
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