Assessing the Impact of Good Corporate Governance, Tax Planning, and Financial Distress on Earnings Management with Internal Control as Mediating
Keywords:earnings management, good corporate governance, tax planning, financial distress, internal control
With internal control functioning as a mediator, this study aims to understand how financial distress, tax planning, and strong corporate governance affect earnings management. This study used PLS-SEM approach, and it was applied to a sample of 20 manufacturing companies that were listed on the Indonesia StockExchange between 2017 and 2021. The results showed that while tax planning has no substantial effect oninternal control, financial distress, and good corporate governance do. Internal control acts as a mediating between financial distress, tax planning, and good corporate governance, rather than having a direct impact onearnings management. Analysis results indicated that financial distress and good corporate governance have an impact on internal control, but tax planning does not. Only internal control, which showed a substantial link, showed a meaningful relationship between financial distress, tax planning, and good company governance. These findings underscore the importance of robust internal control measures in mitigating unlawful earnings management actions. Enhancing internal control should be a top priority for manufacturing organizations, especially in the context of financial distress and good corporate governance, to proactively reduce the danger of undesirable earnings management practices.