The Importance of Profit Management

Oct 13, 2025 by magicalceylontours.com 93 views

The Effect of Corporate Social Responsibility Dividend Policy on Profit Management with Audit Quality as a Moderation Variable in Manufacturing Companies Listed on the Indonesia Stock Exchange in 2018-2022

Introduction

In today's business landscape, companies are under increasing pressure to demonstrate their commitment to social responsibility and transparency. One way to achieve this is through the disclosure of corporate social responsibility (CSR) and dividend policies. However, the impact of these disclosures on profit management remains a topic of debate among researchers and practitioners. This study aims to investigate the effect of CSR disclosure and dividend policies on earnings management in manufacturing companies listed on the Indonesia Stock Exchange (IDX) between 2018 and 2022, with audit quality as a moderation variable.

The Importance of Profit Management

Profit management is a critical aspect of a company's financial performance, as it involves the management of the company's profit statement to comply with applicable accounting standards. This process can be carried out through the company's daily activities during the current accounting period. Effective profit management can help companies to maintain a positive image, increase shareholder confidence, and improve their financial stability.

The Role of CSR Disclosure and Dividend Policies

CSR disclosure refers to the practice of companies conveying information related to their social responsibility activities. This can include information on environmental sustainability, community development, and human rights. Dividend policies, on the other hand, refer to the company's strategy for distributing profits to shareholders. A strict dividend policy can signal to investors that the company is committed to maintaining a stable financial position.

The Moderating Role of Audit Quality

Audit quality refers to the effectiveness of the audit process in detecting and preventing earnings management practices. High-quality audits are expected to increase investor confidence and minimize manipulation of financial statements. However, the impact of audit quality on the relationship between CSR disclosure, dividend policy, and earnings management remains unclear.

Research Methodology

This study uses secondary data taken from manufacturing companies listed on the IDX during the 2018-2022 period. The sample studied was 46 companies, with a total of 230 observations. To analyze data, the panel regression method is used, and the moderation of interaction test is conducted with the help of EViews and SPSS software.

Research Results

The results of this study show that CSR disclosure has no significant influence on earnings management. This suggests that even though companies convey information related to social responsibility, there is no impact seen in the practice of managing earnings. Conversely, dividend policy is proven to have a negative influence on earnings management. This can be interpreted that companies with tighter dividend policies tend to manage more conservative profits, perhaps to maintain shareholder confidence and create a positive image.

Interestingly, this study also found that audit quality does not function as a moderation variable between CSR disclosure and dividend policy on earnings management. This suggests that although high-quality audits are expected to increase investor confidence and minimize manipulation of financial statements, in fact, audit quality is not strong enough to influence the relationship between CSR, dividend policy, and earnings management.

Analysis and Implications

These findings have important implications for stakeholders, especially company managers and investors. For management, the results show that the focus on CSR disclosure was not enough to change the behavior of earnings management. This means that there needs to be a more effective strategy in increasing the transparency of financial statements and the implementation of more tangible and measurable social responsibility.

For investors, these findings illustrate the importance of considering dividend policies as an indicator in assessing the risk of earnings management. A strict dividend policy can be a signal that the company is trying to avoid aggressive earnings management practices, providing an indication that the company has better stability.

In the context of audit quality, although it is expected to provide protection against earnings management practices, the results of this study indicate that audit quality alone is not enough. This shows the need to increase the mechanism of internal and external supervision that is stronger to maintain the integrity of financial statements.

Conclusion

Overall, this research provides valuable insight into the interaction between the disclosure of corporate social responsibility, dividend policy, and earnings management in manufacturing companies listed on the IDX. The results obtained provide a basis for further research and more effective policy development in order to increase company transparency and accountability.

Recommendations

Based on the findings of this study, the following recommendations are made:

Companies should focus on implementing more tangible and measurable social responsibility activities to increase transparency and accountability.
Investors should consider dividend policies as an indicator in assessing the risk of earnings management.
The mechanism of internal and external supervision should be strengthened to maintain the integrity of financial statements.
Further research should be conducted to investigate the impact of CSR disclosure and dividend policies on earnings management in other industries and countries.

Limitations

This study has several limitations that should be acknowledged. Firstly, the sample size is relatively small, and the study is limited to manufacturing companies listed on the IDX. Secondly, the study only examines the impact of CSR disclosure and dividend policies on earnings management, and does not consider other factors that may influence earnings management. Finally, the study relies on secondary data, which may not be comprehensive or accurate.

Future Research Directions

This study provides a foundation for further research in the area of CSR disclosure, dividend policies, and earnings management. Some potential future research directions include:

Investigating the impact of CSR disclosure and dividend policies on earnings management in other industries and countries.
Examining the role of audit quality in detecting and preventing earnings management practices.
Investigating the impact of other factors, such as corporate governance and board composition, on earnings management.
Developing more effective policy development to increase company transparency and accountability.
Q&A: The Effect of Corporate Social Responsibility Dividend Policy on Profit Management with Audit Quality as a Moderation Variable in Manufacturing Companies Listed on the Indonesia Stock Exchange in 2018-2022

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of Corporate Social Responsibility (CSR) disclosure and dividend policies on earnings management in manufacturing companies listed on the Indonesia Stock Exchange (IDX) between 2018 and 2022, with audit quality as a moderation variable.

Q: What is the significance of this study?

A: This study is significant because it provides valuable insight into the interaction between CSR disclosure, dividend policy, and earnings management in manufacturing companies listed on the IDX. The results obtained provide a basis for further research and more effective policy development in order to increase company transparency and accountability.

Q: What are the key findings of this study?

A: The key findings of this study are:

CSR disclosure has no significant influence on earnings management.
Dividend policy is proven to have a negative influence on earnings management.
Audit quality does not function as a moderation variable between CSR disclosure and dividend policy on earnings management.

Q: What are the implications of this study for company managers and investors?

A: The implications of this study for company managers and investors are:

Company managers should focus on implementing more tangible and measurable social responsibility activities to increase transparency and accountability.
Investors should consider dividend policies as an indicator in assessing the risk of earnings management.
The mechanism of internal and external supervision should be strengthened to maintain the integrity of financial statements.

Q: What are the limitations of this study?

A: The limitations of this study are:

The sample size is relatively small.
The study is limited to manufacturing companies listed on the IDX.
The study only examines the impact of CSR disclosure and dividend policies on earnings management, and does not consider other factors that may influence earnings management.
The study relies on secondary data, which may not be comprehensive or accurate.

Q: What are the future research directions based on this study?

A: The future research directions based on this study are:

Investigating the impact of CSR disclosure and dividend policies on earnings management in other industries and countries.
Examining the role of audit quality in detecting and preventing earnings management practices.
Investigating the impact of other factors, such as corporate governance and board composition, on earnings management.
Developing more effective policy development to increase company transparency and accountability.

Q: What are the practical implications of this study for policymakers and regulators?

A: The practical implications of this study for policymakers and regulators are:

Policymakers and regulators should consider the impact of CSR disclosure and dividend policies on earnings management when developing policies and regulations.
Policymakers and regulators should strengthen the mechanism of internal and external supervision to maintain the integrity of financial statements.
Policymakers and regulators should consider the role of audit quality in detecting and preventing earnings management practices.

Q: What are the future implications of this study for the business community?

A: The future implications of this study for the business community are:

Companies should focus on implementing more tangible and measurable social responsibility activities to increase transparency and accountability.
Companies should consider dividend policies as an indicator in assessing the risk of earnings management.
Companies should strengthen the mechanism of internal and external supervision to maintain the integrity of financial statements.

Q: What are the future implications of this study for investors?

A: The future implications of this study for investors are:

Investors should consider dividend policies as an indicator in assessing the risk of earnings management.
Investors should focus on companies that have a strong track record of transparency and accountability.
Investors should consider the role of audit quality in detecting and preventing earnings management practices.