FFECT OF REAL EARNINGS MANAGEMENT AND ESG DISCLOSURE ON THE COST OF DEBT WITH POLITICAL CONNECTION AS A MODERATING VARIABLE: EVIDENCE FROM LISTED FIRMS IN INDONESIA

FIRAS, RAMIZ (2023) FFECT OF REAL EARNINGS MANAGEMENT AND ESG DISCLOSURE ON THE COST OF DEBT WITH POLITICAL CONNECTION AS A MODERATING VARIABLE: EVIDENCE FROM LISTED FIRMS IN INDONESIA. Skripsi thesis, Politeknik Keuangan Negara STAN.

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Abstract

This study aims to examine the effect of Real Earnings Management, ESG Disclosure on the Cost of debt with political connections as a moderating variable. This study uses a quantitative approach to non-financial listed firms on the Indonesia Stock Exchange as samples with observations period from 2018 to 2021. The data used in this study are time series and cross-sectional in nature which are then tested in the form of panel data using the fixed effect model approach. According to the findings of this study, Real earnings management has a significant positive relationship with the cost of debt, while ESG Disclosure does not have a significant negative relationship with the cost of debt. Then, political connection is shown to have a moderating effect depending on the variable to which they are associated. Further research demonstrates that political connection does not weaken the positive impact of real earnings management on the cost of debt. Consequently, the political connection strengthens the negative relationship between ESG Disclosure and the cost of debt. The study emphasizes the importance of instituting ethical and transparent financial practices, as well as robust ESG disclosure, in managing debt costs. It provides insight into the potential benefits of aligning financial and sustainability practices, which can lead to improved financial performance, increased investor confidence, and decreased financing costs for businesses. Keywords: Real Earnings Management, ESG Disclosure, Political Connection, Cost of Debt.

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