ENTERPRISE RESOURCE PLANNING AND REAL EARNINGS MANAGEMENT: A STUDY IN INDONESIA

ENTERPRISE RESOURCE PLANNING AND REAL EARNINGS MANAGEMENT: A STUDY IN INDONESIA

abnormal activities, enterprise resource planning, real earnings management, information asymmetry

This study examines the effect of Enterprise Resource Planning (ERP) on Real Earnings Management (REM). The sample used was 590 manufacturing firm-years listed on the Indonesia Stock Exchange for 2017-2021. REM is proxied by three abnormal activities: oversales, overproduction, and discretionary expense cutting. The result of the panel data regression analysis indicates that ERP implementation has a significant negative effect on REM. Further, the role of ERP system
implementation in reducing REM is more prominent for overproduction, discretionary expenses
activities, and suspect firms of beating revenue targets. ERP system is essential for reducing
information asymmetry and constraining REM effectively. This study provides implications for firm
management in making decisions about ERP investment and improving ERP performance, thereby
reducing REM. This study strengthens and extends previous findings about ERP in REM by
involving non-ERP implementers as a control group, using alternative ERP implementation periods
to control for effectiveness, and also examines the firm's suspect and non-suspect of REM

Siti Rokhaniyah, Alex Johanes Simamora, Mumpuni Wahyudiarti Sitoresmi

DOI: http://dx.doi.org/10.26418/jebik.v12i1.59655

Univ. Tanjungpura

30-04-2023

Sri Wahyuni

P-ISSN : 2087-9954, E-ISSN: 2550-0066

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English

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Jurnal Ekonomi Bisnis dan Kewirausahaan (JEBIK) Univ. Tanjungpura 2023