The Role of Employee Stock Option Plan to Reduce Earnings Management Actions
Journal Title: Jurnal Keuangan dan Perbankan - Year 2017, Vol 21, Issue 3
Abstract
This research aimed to investigate the influence of earnings management on the compensation of the Employee Stock Option Plan (ESOP). Taking agency theory to explain the conflict between managers and shareholders. It was expected that ESOP would increase the managerial responsibility to companies, but the managers have abused it to gain more benefits for themselves. This research used simple linear regression and multiple linear regression analysis with a sample of 120 publicly traded companies listed on the Stock Exchange during 2011-2014. This study had one independent variable (ESOP) and controls four variables (managerial ownership, institutional ownership, the board of directors and audit committees). The result of this study was that earnings management had a positive impact on improving employee compensation due to the ESOP program. The existence of managerial ownership and commissioners could reduce earnings management actions in the implementation of the ESOP.
Authors and Affiliations
Namla Elfa Syariati, Bambang Subroto, Wuryan Andayani
Keywords
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- EP ID EP438621
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