Abstract: The purpose of this study was to examine the effect of an audit committee on earnings management moderated by financial distress and earnings ...
Audit Committee and Earnings Management: The Moderating Effect of Financial Distress and Earnings Litigation 96-111 Bambang Setyo Budi Irianto, Imam Ghozali and , Tarmizi Achmad Abstract: The purpose of this study was to examine the effect of an audit committee on earnings management moderated by financial distress and earnings litigation. To examine this phenomenon, a sample consisting of manufacturing companies listed in the Indonesia Stock Exchange in period 2005-2011 was employed. Examination was done using path analysis test through multiple-group analysis testing. The testing results led to the conclusion that audit committees have an influence on earnings management if either the financial distress or the earnings litigation variable exists. In so doing, generally it can be concluded that the effectiveness of the audit committees in overseeing earnings management will be more apparent if the companies are under pressure. Keywords: audit commiittee, earnings management, moderation, financial distress, earnings litigation
