Political Connections Moderate Profitability, Liquidity, And Accounting Conservatism on Earnings Quality (Case Study of Manufacturing Companies Listed on the IDX from 2020 to 2023)

DOI

10.2991/978-2-38476-366-5_12How to use a DOI?

Keywords

political connections; conservatism; earnings quality; liquidity; profitability

Abstract

This research aims to identify the factors that influence earnings quality in manufacturing companies in Indonesia. The quality of earnings reported by companies is a crucial factor for investors and stakeholders in making the right decisions. This study’s motivation comes from Indonesia’s unique business environment, where political connections can significantly influence corporate practices and financial reporting. The research method used a quantitative approach through purposive sampling techniques on manufacturing companies listed on the IDX from 2020 to 2023. The results of the study show that profitability has a negative effect on earnings quality while accounting conservatism has a positive effect on earnings quality. However, liquidity has no effect on earnings quality. The implications of this study suggest that stakeholders should not solely rely on profitability as an indicator of earnings quality, as it may not reflect true financial health. Instead, a focus on accounting conservatism is recommended to enhance earnings quality. Furthermore, the moderating role of political connections indicates a need for increased scrutiny of companies with political ties to ensure transparent and reliable financial reporting. These insights can guide policymakers in developing regulations that promote better financial practices and accountability in Indonesia’s capital market.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Sri Ayem
AU  - Umi Wahidah
AU  - Nur Anita Chandra Putry
AU  - Puji Lestari
PY  - 2025
DA  - 2025/02/28
TI  - Political Connections Moderate Profitability, Liquidity, And Accounting Conservatism on Earnings Quality (Case Study of Manufacturing Companies Listed on the IDX from 2020 to 2023)
BT  - Proceedings of the 1st International Conference on Social Environment Diversity (ICOSEND 2024)
PB  - Atlantis Press
SP  - 126
EP  - 133
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-366-5_12
DO  - 10.2991/978-2-38476-366-5_12
ID  - Ayem2025
ER  -