BOOK TAX DIFFERENCES ON EARNINGS MANAGEMENT: A STUDY ON MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE

Abstract

This study was conducted to determine if large positive book tax differences (LPBTD) and large negative book tax differences (LNBTD) affected earnings management. The factors examined in this study were book tax differences as independent variable and earnings management as the dependent variable.
The method applied in this study wasthe explanatory method. This study used non-probability in determining the sample, while the population in this study was the financial statements of manufacturing companies listed on the Indonesia Stock Exchange (IDX). Furthermore, a purposive sampling method was chosen as the sampling technique of this study. Therefore, the sample applied was the financial statements of manufacturing companies listed on the Indonesia Stock Exchange (IDX) along two years from 2017-2018. In addition, the data analysis appliedwas multiple linear regression analysis at a significance level of 5%. Besides, the program employed in analyzing the data was Eviews 9.
The results revealed that book tax differences affect earnings management both partially and simultaneously. Additionally, the results also revealed that the magnitude of the influence of LPBTD and LNBTD in this study was 45.5%, while the remaining 54.5% was elucidated by other variables beyond the research model.