Stakeholder Pressure and Earnings Quality: The Moderating Role of Audit Committee Financial Expertise

anisah novi karunia, willa putri malinda buchori, adeng pustikaningsih

Abstract


The purpose of this study is to examine the impacts of customer and supplier pressures, and financial expertisees on reported earnings quality of firms following global financial crisis and accounting scandal period. With reference theory of stakeholder, it examines the effect of customers and suppliers as external stakeholders on financial reporting reliability and whether the existence of a member with financial expertise background in audit committee could change this relationship.

The method of research is quantitative analysis using SEM-PLS to test hypothesis consists (t studi pada sampel perusahaan manufaktur yang nya di Bursa Efek Indonesia periode 2014-2021). Earning quality is proxied by discretionary accrual (DA) from Dechow-Dichev 2002 and Kothari et al. (2005), and Stubben (2010) models. Stakeholder pressure is represented with two proxies in customer concentration and supplier concentration, and audit committee expertise is measured by the numbers of members who have accounting/finance experiences.

This study's findings indicate that both customer and supplier pressure have a significant effect on the earnings quality of Indonesia manufacturing firms. Yet, the financial proficiency of audit committees do not materially moderate this link pointing out potential shortcoming in the efficiency of governance mechanisms in that particular culture.


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