The Effect of Profitability, Leverage, and Green Accounting on Earnings Management in Manufacturing Companies in Indonesia

Abstract

This study looks at how profitability, leverage, green accounting, and earnings management
relate to Indonesian manufacturing businesses that are listed. Employing a quantitative research
design, the study focuses on manufacturing companies listed on the Indonesia Stock Exchange
(IDX) during the 2019–2023 period. A purposive sampling method was utilized to identify the
firms included in the study. Secondary data were gathered from PROPER ratings published by
the Ministry of Environment and Forestry, annual corporate reports, the IDX website, and
firms’ official websites. The collected data were processed using multiple linear regression
analysis through SPSS version 20. The findings suggest that profitability, represented by
Return on Assets (ROA), positively and significantly influences earnings management. On the
other hand, leverage has a substantial detrimental impact on earnings management, as indicated
by the Debt-to-Equity Ratio (DER). Earnings management strategies are not significantly
impacted by green accounting, as seen by environmental performance.