Exploring the interplay of earnings management, business strategy and market competition: the case of Indonesia and South Korea

Fedora, Adela Cornelia and Rudiawarni, Felizia Arni and Sulistiawan, Dedhy and Gumrah, Abdurrahman (2024) Exploring the interplay of earnings management, business strategy and market competition: the case of Indonesia and South Korea. Asian Journal of Accounting Research. ISSN 2443-4175

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Abstract

Purpose – The purpose of this study is to investigate the connection between earnings management, business strategy, and market competition. Design/methodology/approach – The study utilizes data from non-financial companies listed on the Indonesia and South Korea Stock Exchange between 2017 and 2021, involving 2,598 firms from Indonesia and 3,256 firms from South Korea. We use data panel analysis to explore the relationships between variables. Findings – Firms using cost leadership are prone to earnings management, while differentiation strategies are less inclined to do so. Market competition negatively correlates with earnings management in Indonesia and South Korea. Market competition moderates the relationship between differentiation strategy and earnings management in both countries. When profitability is considered, the results remain consistent, particularly in Indonesia. Research limitations/implications – This research enriches previous studies on earnings management and business strategy by examining the extent of industry competitiveness in developed and developing markets. Practical implications – This finding is significant for managers, guiding them in the selection of an appropriate business strategy within a competitive environment. Originality/value – This study is unique in that it examines the subject matter in both developed and developing countries, specifically Indonesia and South Korea, to compare the differences.

Item Type:	Article
Uncontrolled Keywords:	Earnings management, Business strategy, Cost leadership, Differentiation, Market competition
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Divisions:	Faculty of Business and Economic > Department of Accounting
Depositing User:	Felizia Arni Rudiawarni 31129
Date Deposited:	30 Aug 2024 05:30
Last Modified:	20 Jan 2025 02:48
URI:	http://repository.ubaya.ac.id/id/eprint/47023

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