Effect of Leverage and Free Cash Flow on Earnings Management with an Independent Audit Committee as a Moderation

This study aims to examine the Effect of Leverage and Free Cash Flow on Earnings Management with the Independent Audit Committee as a Moderating Variable. The samples used were manufacturing companies in the basic and chemical industry sectors that were listed on the Indonesia Stock Exchange (IDX) and published annual reports and sustainability reports for the 2018-2020 period.

Sampling was carried out using the purposive sampling method. Data analysis used in this study used Panel Data Regression Analysis with the Eviews 9 application tool. The results of this study indicate that the free cash flow variable as measured by DAC has a negative effect on earnings management. However, the leverage variable as measured by DAR has a positive effect on earnings management. The moderating variable, namely the independent audit committee as measured by the independent audit committee ratio, is unable to moderate the relationship between leverage and free cash flow on earnings management.