The Associations Between Earnings Management, Corporate Environmental Disclosure, Corporate Financial Performance and Corporate Governance Mechanisms

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Abstract: The aim of the study is to investigate the associations between earnings management (DA), corporate environmental disclosure (CED), corporate financial performance (CFP), and corporate governance (CG) mechanisms. Using Partial Least Squares-Structural Equation Modelling (SEM), the study obtains empirical findings consistent with all hypotheses. DA has a positive effect on both CED and CFP; CED has a positive effect on CFP; and CG partially mediates the effect of DA on CFP. CG, as measured by institutional ownership and the number of audit committees, weakens the association between DA and CFP. However, CG, as measured by the proportion of independent commissioners, is not able to weaken the association of DA and CFP. Therefore, CG does not fully moderate the relationship between DA and CFP. It is recommended that control variables be used in order to clarify the effect of latent variables in future studies.

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 16, 2019, Art. #38

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St. Dwiarso Utomo, Zaky Machmuddah, Melati Oktafiyani, "The Associations Between Earnings Management, Corporate Environmental Disclosure, Corporate Financial Performance and Corporate Governance Mechanisms," WSEAS Transactions on Business and Economics, vol. 16, pp. 337-344, 2019, DOI:
St. Dwiarso Utomo, Zaky Machmuddah, Melati Oktafiyani. The Associations Between Earnings Management, Corporate Environmental Disclosure, Corporate Financial Performance and Corporate Governance Mechanisms. WSEAS Transactions on Business and Economics. 2019;16:337-344.
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