DETECTION OF EARNING MANAGEMENT USING EXPERIMENTAL APPROACH
This study aims to prove that managers will alter accounting policies to increase the earning when there is a debt contract, reduce the earning when associated with corporate income tax and can increase the earning when there is a Bonus scheme. The experiment was conducted by using Controlled laboratory experiment. Subjects/participants were 108 of the fourth-semester students of the accounting department. The dependent variable is the decision to choose/determine the accounting policy, while the independent variable is the treatment: the contract of debt, Corporate Income Tax, and Bonus scheme. The experimental design uses a 1x4 factorial design (the students vs. the decision to choose the earning without treatment, the decision to choose the earning associated with the debt contract, the decision to choose the earning associated with the Corporate Income, and the decision to choose the earning associated with the Bonus scheme). The data analysis method used One Way ANOVA to determine the presence/absence of the different response of the subjects/ the subjects choose/ determine policies that can increase/ decrease profits as a result of the treatment provided. Furthermore, the thorough effect of each treatment was investigated using post hoc test scheffe method. The findings show that managers choose policies that can: raise the earning when associated with debt contracts, decrease the earning when associated with corporate income tax, increase the earning when associated with bonus contracts.
detection, earnings management, experiment