The Impact of Ownership Characteristics and Gender on Earnings Management: Indonesian Companies

Round 1

Reviewer 1 Report

Dear Authors,

Thank you so much for your efforts in preparing this researh paper. However, i have the following comments:

1- The research methodology must be mentioned in the abstract.

2- I think better to use "Earnings Managemnt" instead of "Earning Managemnt".

3- The formulation of all hypotheses "Lines 251, 260, and 261" are not successful. They are not full clear and must be rephrased. For example, would you like to say: family ownership has / has no effect on the earnings management? Please check all the three hypotheses.

4- Isn't there a contradiction between line 268 and line 273. In other words, how do you say that the study relies on companies listed between 2016-2019, and then depends on data published between 2013-2019??!! It is well known that companies start publishing their financial statements in the stock exchange as of the date of listing the company rather than the date of the company incorporation!!.

5- Your results should be based on your seperate hypotheses and also should be supported by similar results from other studies.

6- Many references are very old. The references have to be from the last 10 years and better to be from the the last 5 years if possible.

Al the best, 

Author Response

1 – we have explain about the research method at abstract (line 24-25)

2 – we have revision all “earning management” with exchange “earnings management”

3 – it’s means line 268 is a years publication they financial reporting to capital market regulatory agency Indonesia. line 276 what we mean is the period of the observation year, where the financial statements needed for measuring the required variables are available in full in each company's financial statements (see line 268 and line 276)

4 – The correct research data is 2016-2019. so the data used is data published by companies in Indonesia from 2016-2019. we convey that we made a mistake in typing what we meant was 2016-2019 not 2013-2019. We have made corrections for this typing error (see 371-381)

5 - we have revised all the presentation of research results which are supported by the results of other similar studies (for example: see line 491 support H1, 506 support H2, and 521 support H3)

6 - we have replaced all newer references

Author Response File: Author Response.pdf

Reviewer 2 Report

If the authors revise the paper appropriately it will be publishable and interesting to readers. However, I cannot understand the current version. I do not understand the construction of the DAC variable. Is the formula for its construction missing a division (/) sign? The authors need to explain so the reader can understand what they are doing. 

I also have some specific comments.

The last sentence of the abstract is confusing and needs a rewrite.

I dont know what PWC means.

Section 2.1 second paragraph. the first alleged sentence is not a sentence. The writing needs improvement. For example "investment that have been invested" needs to be rewritten. You need to define "corporate governance." Is it the same as good corporate governance? 

"Earnings management is said to be prolemantic when it is purely doing earnings management in terms of real activities." I have no idea what this means.

I hope the authors will rewrite and resubmit.

 

Author Response

1. we use the DAC measure based on the formula developed by Friedland (1994) and we have revised the DAC formula (see table 1)
2. we have revised all the sentences in the abstract
3. PWC is PricewaterhouseCoopers Company, which is one of the largest public accounting firms in the world known as the big four.
4. we've rewritten the sentence "investment that have been invested" with a more understandable explanation (see line 105-109)
5. we mean by problematic we explain by rewriting “so that earnings management is an action taken by agents to manipulate the recognition of accounting transactions related to profit/loss which is a form of good signal of agent performance.” (see line 196-198)

Author Response File: Author Response.pdf

Reviewer 3 Report

 Article: The impact of ownership characteristics and gender on earnings management: Indonesian companies

After reviewing this article, I think it is potential for publication but the authors should revise as comments below:

- In the introduction, the authors should make clear the research gap, I see some previous studies have the same topic, and the author should review them and emphasize your contribution. The motivation of the study is clear, but the authors must review the literature more and show point out what previous research has not covered.

- The literature review is very weak. First, the author must review the theories to support the hypothesis development. I only see agency theory, which theory supports gender diversity? Second, The author should update the recent studies. Especially, the hypotheses development of H2 and H3 is very weak. I find many previous studies relating to this topic but not to be reviewed in the section. So, I suggest that the authors review and cite the previous studies as follows: Nguyen (2020); Dobija et al. (2022); Nguyen (2022); Dang and Nguyen (2021); Nguyen and Dang (2022); Bhuiyan et al. (2020); Nguyen (2022b); … (see reference)

In section 3, you should explain why the data is from 2016-2019? What is data source of governance variables such as ownership, female members…?

-  The author must add a correlation matrix table

- The authors need to add VIF values for the variables

- This study completely lacks robustness tests, I strongly suggest that the author use another estimation method (Fixed-effect, GMM…). The results of OLS estimation may not be reliable. 

- The authors should show the limitation and suggestions for further research in the conclusion.

References

Bhuiyan, M. B. U., Cheema, M. A., & Man, Y. (2020). Risk committee, corporate risk-taking and firm value. Managerial Finance, 47(3), 285-309. 

Dang, V. C., & Nguyen, Q. K. (2021). Internal corporate governance and stock price crash risk: evidence from Vietnam. Journal of Sustainable Finance & Investment, 1-18. doi:10.1080/20430795.2021.2006128

Nguyen, Q. K. (2022b). Determinants of bank risk governance structure: A cross-country analysis. Research in International Business and Finance, 60, 101575. doi:https://doi.org/10.1016/j.ribaf.2021.101575

Nguyen, Q. K., & Dang, V. C. (2022). Does the country’s institutional quality enhance the role of risk governance in preventing bank risk? Applied Economics Letters, 1-Nguyen, Q. K. (2022). The impact of risk governance structure on bank risk management effectiveness: evidence from ASEAN countries. Heliyon, e11192.

Dobija, D., Hryckiewicz, A., Zaman, M., & Puławska, K. (2022). Critical mass and voice: Board gender diversity and financial reporting quality. European Management Journal, 40(1), 29-44. 

Nguyen, Q. K. (2020). Ownership structure and bank risk-taking in ASEAN countries: A quantile regression approach. Cogent Economics & Finance, 8(1), 1809789. 

Nguyen, Q. K. (2022). Audit committee structure, institutional quality, and bank stability: evidence from ASEAN countries. Finance Research Letters, 46, 102369. 

 

Author Response

1. we try to present a research gap on line 55-77
2. We have added a literature review for hypothesis development by adding a hypothesis development subtitle to the line 302-370 (point 2.5. Hypothesis Development)
3. we've added a subtitle 4.2. correlation which contains a correlation matrix table
4. we add VIF values in table 4
5. we have added a robustness test using the fixed model test method in subtitle 4.4. robustness test
6. we have added research limitations on lines 572-574
7. we have added some suggested references like: Bhuiyan, M. B. U., Cheema, M. A., & Man, Y. (2020); Dang, V. C., & Nguyen, Q. K. (2021); Nguyen, Q. K. (2022b); etc (see point 2.5. Hypothesis Development

Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

ready to publish. good work

Reviewer 3 Report

This version is good. Congratulation.