Does Ownership Structure Play an Important Role in the Banking Industry?

  ABSTRACT : PSAK 71 adopts IFRS 9 to regulate and provide guidance on the recognition and measurement of financial instruments. PSAK 71 regulates changes in classification and measurement, impairment, and hedge accounting. This research aims to determine the role of the banking ownership structure in Indonesia in influencing earnings management during the enactment of PSAK 71. This research analyse quantitative data that has been collected from annual reports of financial services companies in the banking sub-sector listed on the Indonesia Stock Exchange using STATA 14. The results of the research show that concentrated and government ownership has a relationship with earning management practice. This research implies that measuring earnings management must not only be done through abnormal loan loss provision but can also be done using other techniques, namely techniques for managing earnings to report small positive earning.

Keywords: Banking Industry, Ownership Structure, Earnings Management, PSAK 71