Jurnal Ekonomi Bisnis dan Kewirausahaan (JEBIK)

2023, Vol.12, No.1, 110-127

ENTERPRISE RESOURCE PLANNING AND REAL EARNINGS

MANAGEMENT: A STUDY IN INDONESIA

Siti Rokhaniyah, Alex Johanes Simamora, Mumpuni Wahyudiarti Sitoresmi

Universitas Tidar, Indonesia

ABSTRACT
This study examines the effect of Enterprise Resource Planning (ERP) on Real Earnings Management
(REM). The sample used was 590 manufacturing firm-years listed on the Indonesia Stock Exchange
for 2017-2021. REM is proxied by three abnormal activities: oversales, overproduction, and
discretionary expense cutting. The result of the panel data regression analysis indicates that ERP
implementation has a significant negative effect on REM. Further, the role of ERP system
implementation in reducing REM is more prominent for overproduction, discretionary expenses
activities, and suspect firms of beating revenue targets. ERP system is essential for reducing
information asymmetry and constraining REM effectively. This study provides implications for firm
management in making decisions about ERP investment and improving ERP performance, thereby
reducing REM. This study strengthens and extends previous findings about ERP in REM by
involving non-ERP implementers as a control group, using alternative ERP implementation periods
to control for effectiveness, and also examines the firm's suspect and non-suspect of REM.
JEL: M410, M400, M21.
Keywords: abnormal activities, enterprise resource planning, real earnings management,
information asymmetry.

1. INTRODUCTION
Agency theory suggests that the relationship between managers and shareholders creates
a conflict of interest (Jensen & Meckling, 1976). This conflict occurs because of information
asymmetry, indicating that managers hold more information than shareholders. It leads to higher
agency costs, such as monitoring costs or other managers' opportunistic behaviors. One of the
managers' opportunistic behaviors is earnings management.
Earnings management refers to policy choices taken by managers to manage reported
earnings (Paredes & Wheatley, 2018). Earnings management consists of accrual-based earnings
management, which involves manipulating earnings using weaknesses in accounting standards,
and REM, which involves operating activities that deviate from normal levels (Simamora,
Rokhaniyah, & Atika, 2022). Since the bankruptcy of Enron in 2002, earnings management has
become a crucial issue due to practices of earnings manipulation and concealment of financial
problems (Wulandari & Setiawan, 2023). Some famous cases related to opportunistic earnings
management behavior are Enron, WorldCom, and Merck. Enron's management marked up
earnings of up to US$ 600 million to cover up poor performance (Tarigan, 2019). WorldCom, one
of the biggest telecommunication firms in the USA, also does financial manipulation by covering
expenses up to US$ 3.8 billion (Lateef, Rasid, Mustapha, & Ado, 2019). Merck Co also
manipulates revenues up to US$ 14.1 billion in 3 years. In Indonesia, the current earnings
management case was Garuda Indonesia in 2018. Garuda Indonesia recognizes 15 years contract
value of about US$ 239.94 million in a year of s revenue, so earnings have improved drastically


Email : siti.rokhaniyah@untidar.ac.id
Received : 14-11-2022, Accepted: 17-04-2023, Published: 30-04-2023
P-ISSN : 2087-9954, E-ISSN: 2550-0066. DOI: http://dx.doi.org/10.26418/jebik.v12i1.59655

110
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 111

from negative US$216.58 million in 2017 to positive US$809.85 thousand in 2018 (Nanda, Zenita,
Salimiah, & Adino, 2022).
One way to constrain earnings management behavior is to improve information technology
implementation. Information technology implementation can reduce information asymmetry
(Ermilova & Laptev, 2021) and support internal control effectiveness (Xu, Guo, Haislip, &
Pinsker, 2019). Poor information technology implementation could increase managers' potential
to engage in earnings management (Heninger, Johnson, & Kuhn, 2018; Wang, Bu, & Peng, 2021).
Enterprise resource planning (ERP) is an alternative information technology to be
implemented by firms. An enterprise resource planning system is an information system package
that integrates information and information-based processes within and across functional areas in
an organization (Zerbino, Aloini, Dulmin, & Mininno, 2021). Since the enterprise resource
planning system integrates information between functional areas, there is little chance of
information asymmetry. The enterprise resource planning system allows firms to store similar
information across different departments without the need for duplication (Febrianto &
Soediantono, 2022). It updates data and information simultaneously (Patnaik, Satpathy, &
Debnath, 2019). Information can be reported in real-time and automatically using an enterprise
resource planning system (Patnaik et al., 2019). Successful enterprise resource planning can reduce
the risk of adverse selection, moral hazard, and agency costs (Kamdjoug, Bawack, & Tayou, 2020).
Previous research has documented findings on the implementation of enterprise resource
planning. AlMuhayfith & Shaiti (2020) found that enterprise resource planning helps firms provide
financial statements rapidly. Kamdjoug et al. (2020) found that enterprise resource planning
provides flexibility in accessing accounting information. Previous research has also found that
enterprise resource planning implementation increases market and financial performance
(Alsurayyi & Alsughayer, 2021; Marsudi & Pambudi, 2021; Putra, Rahayu, & Putri, 2021).
Furthermore, another study found that GAAP violations decreased after firms implemented
enterprise resource planning systems (Dehning, Sinha, & Sinha, 2017). Enterprise resource
planning has a significant role in increasing information sharing and coordination between
services, increasing the company's competitive advantage (AlMuhayfith & Shaiti, 2020; Khaled,
Khatima, & Ibtissem, 2021; Salur & Kattar, 2021). The ERP system is dynamic, so our familiarity
with information technology is a significant asset for the company's sustainability (Dambrin &
Grall, 2023; Song & Zhao, 2021).
Enterprise resource planning provides high-quality data and information and can also
reduce earnings management, especially real earnings management. Luo, Wang, & Wu (2023)
explained that after the implementation of the Sarbanes-Oxley Act (SOX), Accrual-based Earnings
Management (AEM) practices decreased while Real Earning Management (REM) practices
increased. Therefore this study focuses on REM. Managers are more inclined to choose REM than
AEM because AEM attracts the attention of regulatory bodies and external auditors (Goh, Lee, &
Lee, 2013). Thus, it is easier for managers to engage in REM, which they can do all year round,
compared to AEM (Roychowdhury, 2006). Higher enterprise resource planning system
performance is followed by a decline in real earnings management. REM declines after firms
implement enterprise resource planning systems (Paredes & Wheatley, 2018). REM is higher for
non-enterprise resource planning adopters than ERP adopters (Patnaik et al., 2019). Another study
used AEM as a proxy and found that firms that adopt enterprise resource planning systems are less
likely to engage in AEM practices than firms that do not adopt ERP (Toumeh, 2022).
112 Rokhaniyah, Simamora, & Sitoresmi

This study examines the effect of the implementation of enterprise resource planning on
REM differently. Paredes & Wheatley (2018) focused only on REM in firms that adopted ERP and
did not examine whether non-ERP adopters were also involved in REM. Thus, this study fills the
gap by considering both ERP adopters and non-ERP adopters. This is because non-ERP adopters
can engage in higher REM than ERP adopters. This study also examines real earnings management
suspect and non-suspect firms. Information technology is a complex system to implement in
businesses. Thus firms require an ERP implementation period to adapt to the technology. Patnaik
et al. (2019) did not consider the ERP implementation period. Therefore, this study examines the
implementation of ERP in several alternative implementation period scenarios because the
effectiveness of ERP implementation also depends on the implementation period (Paredes &
Wheatley, 2018). The object of this study will focus on Indonesian manufacturing companies listed
on the Indonesian stock exchange from 2017-2021.

2. THEORETICAL FRAMEWORK AND EMPIRICAL STUDIES

2.1. Agency Theory
Agency theory explains the relationship between principals (shareholders) and agents
(managers), as well as the conflict of interests between them due to information asymmetry (Jensen
& Meckling, 1976). Information asymmetry leads managers to act based on self-interest (such as
compensation) and engage in opportunistic behavior (such as earnings management). When a
conflict of interest increases, agency costs also increase. Under such conditions, monitoring and
controlling mechanisms are needed to monitor managers' behavior (Jensen & Meckling, 1976).
Information technology can be applied to the relationship between managers and
shareholders. It helps reveal managers' actions to shareholders or other stakeholders and can be
used to monitor and control roles (Eisenhardt, 1989). When information technology is
implemented in managers' strategy execution, shareholders can monitor how managers finish their
tasks (Wikartika & Akbar, 2019). One of the information technology implementations is the
enterprise resources planning system. An enterprise resource planning system is a system that can
integrate planning and manage organizational resources to be used optimally by building
communication between firms and stakeholders (Rao, 2017). Enterprise resource planning systems
can integrate data and information, helping reduce information asymmetry (Ermilova & Laptev,
2021; Martins & Santos, 2021) and opportunistic behavior such as earnings management (Patnaik
et al., 2019). Enterprise resource planning implementation brings significant changes to a company
regarding organizational structure, process re-engineering, and employee function changes
(Martins & Santos, 2021).
2.2. Positive Accounting Theory
Watts & Zimmerman (1990) initiated positive accounting theory, which explained specific
economic factors or organizational characteristics related to the behavior of managers or financial
statement preparers. They suggested that economic variables affect managers' motivation to make
accounting selections and judgments. Earnings management is suspected to be done by managers
because of economic motivation. Watts & Zimmerman (1990) proposed three hypotheses related
to earnings management: bonus plans, debt agreements, and political costs. The bonus plan
hypothesis refers to managers' behavior to increase earnings when there is a bonus plan. The debt
covenant hypothesis refers to the behavior of companies to increase earnings when their
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 113

performance is poor, and firms tend to obtain more debt funding. The political cost hypothesis
refers to behavior that decreases earnings, especially for big firms that affect most people's life.
2.3. Earnings Management
Earnings management is the opportunistic actions of managers to manipulate reported
earnings for their utility related to compensation schemes, debt contracts, and political costs
(Callao, Jarne, & Wroblewski, 2021). Earnings management consists of accrual-based earnings
management and real earnings management. Accrual-based earnings management is earnings
manipulation using accounting standard weaknesses, while real earnings management is
manipulation by changing business operational activities (Hartono, Suganda, & Cahyadi, 2018).
AEM uses accounting as a tool, whereas REM involves abnormal operational business activities
to increase earnings (Gunny, 2010; Toumeh, 2022).
Suhadak, Nawari, & Wardhani (2022) explained that accrual-based earnings management
techniques can be carried out by using accounting estimation discretion or changing accounting
methods. Accounting estimation can change the magnitude of earnings, such as estimating
doubtful receivables, asset depreciation and amortization period, and guarantee expenses.
Selection of accounting method for a specific transaction also can change several earnings, such
as changing the depreciation method from a double declining method to a straight line one, or
oppositely, changing the inventory cost method from the average method to the last-in-first-out
method.
Earnings management techniques include sales manipulation, oversales, overproduction,
and discretionary expense cutting (Roychowdhury, 2006). Oversales, the technique is used to
temporarily boost sales in a certain period by providing price discounts or lean credit sales. Price
discounts and lean credit sales improve current sales volume and earnings by assuming a positive
margin. Regardless of current sales volume and earnings improvements, price discounts and lean
credit sales generate lower future cash flows, especially cash flows from sales. By overproduction,
managers can also increase earnings. Overproduction leads to lower production fixed costs per
unit, resulting in a lower cost of goods sold and further increasing operating income. Managers use
discretionary expense cutting to reduce current expenses and increase earnings. Discretionary
expenses refer to expenses managers can control, such as operating, research and development,
advertising, sales, and administrative expenses (Toumeh, 2022). Earnings may be increased by
cutting operations, research and development, advertising, sales, and administrative expenses.
However, it can reduce future cash flows because of the higher opportunity costs.
Several motivations drive earnings management practices, such as bonus targets, political
motivations, tax motivations, change of CEO, and Initial Public Offering (IPO) (Callao et al.,
2021). The motivation for bonus targets encourages managers to engage in earnings management
to achieve bonuses and compensation based on the company's earnings performance. Political
motivation leads managers to engage in earnings management towards lower earnings to avoid
public and regulator attention. Tax motivation leads managers to lower earnings to reduce income
tax payments. When the CEO is about to be replaced by a new one, the incumbent CEO may
attempt to manipulate the financial statements by increasing company profits to ensure they receive
higher compensation when they retire or to avoid dismissal if they underperform during their
tenure. When firms go public, they tend to signal investors to intervene in investor decisions,
especially in IPO.
114 Rokhaniyah, Simamora, & Sitoresmi

Callao et al. (2021) explained the types of earnings management: taking a bath, income
minimization, income maximization, and income smoothing. Taking a bath is an extreme type of
earnings management. It refers to earnings management in conditions of financial distress, loss, or
reorganization, which involves recognizing many future expenditures and costs that will be
recognized in the current period so that future financial conditions will not be as bad as the current
period. When managers do not beat "bonus bogey," taking a bath is also used so that managers can
achieve a range of available performances to get earnings-based bonuses. Income minimization is
a type of earnings management to manage earnings downward but not as extreme as taking a bath
type. Income minimization aims to make earnings lower than they should be, primarily because of
political or tax motivations, such as increasing research and development expenses. Income
maximization is a type of earnings management that manages earnings upward to obtain a higher
performance evaluation. It is usually used in an earnings-based compensation program or debt
covenant. Income smoothing is a type of earnings management to manage earnings following the
trend. Income smoothing causes earnings to appear persistent and reduces uncertainty.
The focus of this study is real earnings management. REM is conducted to avoid losses
and achieve earnings right to above zero (Roychowdhury, 2006). By doing so, companies attempt
to avoid financial statements indicating losses and create an impression that the company is still
profitable. Previous studies have documented the existence of REM (Filip, Jeanjean, & Paugam,
2015; Leggett, Parsons, & Reitenga, 2015; Tabassum, Kaleem, & Nazir, 2014; Vorst, 2016).
2.4. Enterprise Resources Planning
An Enterprise resource planning system is modular business software that integrates all
functional areas and activities, such as production, human resource, financial, distribution, sales,
and other systems (Putra et al., 2021). Integration within the enterprise resource planning system
is related to (1) the connection between and within functional areas; (2) the connection between
communication methods and technology; (3) the alignment and synchronization of activities; and
(4) the coordination of operational activities (Rao, 2017). For managers, enterprise resource
planning helps provide integrated and real-time information.
The implementation of an enterprise resource planning system is an expensive investment
that costs around $15 million (Febrianto & Soediantono, 2022). Enterprise resource planning
systems can manage financial information in real-time to improve the quality of financial
information analysis (AlMuhayfith & Shaiti, 2020). Enterprise resource planning systems can also
be a monitoring tool to oversee management (Marsudi & Pambudi, 2021). In performance support,
enterprise resource planning systems can promote efficiency, such as employees, cost of goods
sold reduction (AlMuhayfith & Shaiti, 2020; Martins & Santos, 2021; Mthupha & Bruhns, 2022),
increase firm value (Putra et al., 2021), firm or financial performance (Alsurayyi & Alsughayer,
2021; Marsudi & Pambudi, 2021), internal audit quality (Silva, Marques, & Azevedo, 2023), and
improving sustainable performance (Sislian & Jaegler, 2022).
2.5. Hypothesis Development
Enterprise resource planning system brings some advantages to constrain real earnings
management behavior. First, enterprise resource planning systems can reduce information
asymmetry. Since the enterprise resource planning system allows information to be integrated and
provided in real-time, all functional areas, internal management, and external shareholders obtain
aligned information. Martins & Santos (2021) and Kamdjoug et al. (2020) explained that
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 115

implementing an enterprise resource planning system reduces operational information-seeking

costs for principals. Ermilova & Laptev (2021) and Toumeh (2022) also found that information
technology helps decrease information asymmetry. Information asymmetry leads managers to
engage in more earnings management practices. Previous research (Karin, Kusginto, & Jogi, 2020;
Suhadak et al., 2022; Wibowo & Fuad, 2018) has shown that higher information asymmetry leads
to higher earnings management. When information asymmetry, especially business operational
information, is minimized, REM becomes more difficult to conduct.
Second, the enterprise resource planning system improves the monitoring function.
Implementing an enterprise resource planning system can improve information flow for all
stakeholders. Paredes & Wheatley (2018) stated that an enterprise resource planning system
enhances efficient supply chain management and improves information sharing for suppliers,
managers, and customers. Integrated systems such as enterprise resource planning can link internal
managers to external parties. When it does, the monitoring function of external parties will
increase. Integration between functional areas and departments also helps internal monitoring to
monitor managers effectively. Pangaribuan, Sihombing, Sunarsi, & Manurung (2022) and Xu et
al. (2019) found that information technology improves effective internal control roles. When
internal monitoring is effective, opportunistic behavior is reduced (Kamdjoug et al., 2020). Cohen,
Hoitash, Krishnamoorthy, & Wright (2014) found that effective internal control reduces earnings
management and increases earnings quality.
Managers tend to engage in REM to achieve or even surpass the predetermined profit
targets, which can ultimately impact the bonuses given to managers. They also keep production
costs low by generating excess production or engaging in excessive sales by providing loose credit
and discount rates. By implementing an ERP system that allows access to integrated and real-time
operational business information, internal controls, the board of directors and shareholders can
detect oversales and overproduction activities. Heninger et al. (2018) explained that poor
information technology implementation increases earnings management. Previous research has
found that enterprise resource planning systems constrain REM (Morris & Laksmana, 2010;
Paredes & Wheatley, 2018; Patnaik et al., 2019).
Ha: Enterprise resource planning system implementation has a negative effect on real earnings
management.
Based on the hypothesis to be tested, supporting theories, and results of previous research,
the research framework is illustrated in Figure 1.
116 Rokhaniyah, Simamora, & Sitoresmi

Enterprise Resources
Planning (ERP)

Return on Assets
(ROA)
Real Earnings
Management
Size (REM)

Growth

Agency Cost (AC)

Figure 1. Research Framework

3. RESEARCH METHODS
3.1. Sample
The research sample consisted of manufacturing firms listed on the Indonesian Stock
Exchange for 2017-2021. REM includes oversales, overproduction, and discretionary cost-cutting.
Since excess production is irrelevant to non-manufacturing firms (Roychowdhury, 2006), this
study focused on manufacturing firms' real earnings management practices. The total sample
comprised 590 manufacturing firm-years. The sample was determined using the purposive
technique. The sample selection process is shown in Table 1.
Table 1. Research Sample
Criteria Firms Firm-Years
- Manufacture firms listed (active) in Indonesian Stock Exchange 2017- 120 600
2021
- Change financial reporting period (2) (10)
Total 118 590

3.2. Variables
The dependent variable is REM, measured using three abnormal activities: oversales,
overproduction, and discretionary expense cutting. Oversales are computed by abnormal cash flow
from the operation, overproduction is estimated by abnormal production costs, and discretionary
expenses cutting is estimated by abnormal discretionary expenses. The estimation model is shown
in Equations 1-3 (Roychowdhury, 2006).
𝐶𝐹𝑂𝑡 1 𝑆𝑎𝑙𝑒𝑠𝑡 ∆𝑆𝑎𝑙𝑒𝑠𝑡
= 𝑎 + 𝑏0 + 𝑏1 + 𝑏2 + 𝑒𝑡 …………………..…………… (1)
𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1

𝑃𝑟𝑜𝑑𝑡 1 𝑆𝑎𝑙𝑒𝑠𝑡 ∆𝑆𝑎𝑙𝑒𝑠𝑡 ∆𝑆𝑎𝑙𝑒𝑠𝑡−1

= 𝑎 + 𝑏0 + 𝑏1 + 𝑏2 + 𝑏3 + 𝑒𝑡 ………..………. (2)
𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 117

𝐷𝑖𝑠𝑐𝑟𝑒𝑡𝑖𝑜𝑛𝑎𝑟𝑦 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠𝑡 = 1 𝑆𝑎𝑙𝑒𝑠𝑡−1

𝑎 + 𝑏0 + 𝑏1 + 𝑒𝑡 ………………………………… (3)
𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑠𝑡−1

As all abnormal activities can be performed simultaneously, the real earnings management
indicator is an aggregate of abnormal operating cash flow, abnormal production costs, and
abnormal discretionary expenses (Tabassum et al., 2014).
𝑅𝐸𝑀 = −𝑎𝑏𝑛𝑜𝑟𝑚𝑎𝑙 𝐶𝐹𝑂 + 𝑎𝑏𝑛𝑜𝑟𝑚𝑎𝑙 𝑃𝑅𝑂𝐷 − 𝑎𝑏𝑛𝑜𝑟𝑚𝑎𝑙 𝐷𝐼𝑆𝐸𝑋𝑃 …………………… (4)
Where CFOt is operation cash flow period t, Prodt is production cost period t,
Discretionary Expensest is a total of sales, general, administrative, research, and development
expenses, Salest is sales period t, ∆Salest is a change of sales period t, Assetst-1 is assets period t-1,
∆Salest-1 is a change of sales period t-1, REM is real earnings management, Abnormal CFO is et
equation 1, Abnormal PROD is et equation 2, Abnormal DISEXP is et equation 3.
The independent variable is the implementation of an enterprise resource planning system.
It is measured by a dummy variable: score 1 if the firm implements enterprise resource planning
and 0 if otherwise. Enterprise resource planning implementation can be observed in the annual
report disclosure.
The control variables are return on assets, firm size, growth, and agency costs. Since real
earnings management is motivated by performance assessment, ROA controls the effect of
performance. Net income divided by total assets measures return on assets. Firm size and growth
can control abnormal activity from opportunistic behavior or business conditions (Roychowdhury,
2006). The natural logarithm of total assets measures firm size, while sales change is divided by
total assets to measure growth. Agency cost control is an agency problem that can lead to earnings
management behavior (Suhadak et al., 2022) and is the determinant factor in successfully
implementing an enterprise resource planning system (Kamdjoug et al., 2020). Agency cost is
measured by sales, and general administrative expenses are divided by sales (Farras & Faisal, 2020;
Vorst, 2016).
3.3. Analysis Model
The hypothesis test was conducted using a random-effect regression test. Since ERP
system implementation is not easily changed over a period, fixed-effect regression is irrelevant.
This study also ran a common effect test as a robustness test. The regression model can be seen in
Equation 5.
𝑅𝐸𝑀𝑖,𝑡 = 𝑏0 + 𝑏1 𝐸𝑅𝑃𝑖,𝑡 + 𝑏2 𝑅𝑂𝐴𝑖,𝑡 + 𝑏3 𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝑏4 𝐺𝑅𝑂𝑊𝑇𝐻𝑖,𝑡 + 𝑏5 𝐴𝐶𝑖,𝑡 + 𝑒𝑖,𝑡 ……… (5)
Where REM is real earnings management, ERP is the implementation of an enterprise
resource planning system, ROA is the return on assets, SIZE is firm size, GWROTH is firm growth,
and AC is agency cost.
118 Rokhaniyah, Simamora, & Sitoresmi

4. DATA ANALYSIS AND DISCUSSIONS

4.1. Data Analysis
Table 2. Descriptive Statistics
Percentage of Average
Sample Group Observation Total
REM ROA SIZE GROWTH AC
Observation
Non- 412 69.8% 0.039 0.0285 28.0554 0.1008 0.3233
implementer
Implementer 178 30.2% -0.091 0.0739 29.4080 0.0707 0.1429
Total 590 100.0% 0.0000 0.0422 28.4635 0.0917 0.2688
t-statistics 3.470* 4.319* 9.929* 0.635 1.222
z-statistics 3.880* 4.549* 8.892* 1.713** 0.490
*Significant in 0.01
**Significant in 0.10

Table 2 shows 412 firm-years (69.8% of the total 590 firm-years) that did not implement
enterprise resource planning and 178 firm-years (30.2% of the total 590 firm-years) that
implemented enterprise resource planning. The average REM for a sample that did not implement
enterprise resource planning was 0.0391, while the average for a sample that implemented
enterprise resource planning was -0.0905. As expected, REM for enterprise resource planning
implementers was lower than for non-enterprise resource planning implementers and was
statistically significant. Firms implementing enterprise resource planning had higher ROA and
larger sizes.
Table 3. Regression of Enterprise Resources Planning on Aggregated Real Earnings Management
Variable Coefficient t-statistics
ERP -0.123344 -2.229008**
ROA -0.386327 -3.635296*
SIZE 0.011905 0.785325
GROWTH 0.003270 0.169270
AC -0.003877 -0.992783
Constant -0.284789
F-statistics 3.551762*
Adjusted R2 0.021238
*Significant in 0.01
**Significant in 0.05

Table 3 shows the regression results for the effect of enterprise resource planning on
aggregated real earnings management. The enterprise resource planning implementation had a
coefficient of -0.123344 with t-statistics of-2.229008 (significant at 0.05).
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 119

Table 4. Regression of Enterprise Resources Planning on Each Real Earnings Management

Activities
t- t-
Variable Coefficient Coefficient Coefficient t-statistics
statistics statistics
ERP 0.009532 0.990271 -0.059696 -1.9948** -0.039679 -1.62837***
ROA -0.299972 -9.6725* -0.385972 -5.92047* 0.064188 2.044695**
SIZE -0.005824 -2.1554** 0.006447 0.780120 0.005558 0.869486
GROWTH -0.005593 -0.87724 -0.046600 -3.87139* 0.038538 6.882625*
AC -0.000801 -0.601616 -0.003281 -1.340360 -0.000613 -0.552498
Constant 0.176459 -0.144253 -0.152391
Dependent Over Sales Over Production Discretionary Expenses
Variable Cutting
F-statistics 18.40843* 9.418400* 11.04752*
Adjusted R2 0.128943 0.066803 0.078713
*Significant in 0.01
**Significant in 0.05
***Significant in 0.10

Table 4 presents the regression results for the effect of enterprise resource planning on
each real earnings management activity. Implementing an enterprise resource planning system had
a coefficient value of 0.009532 for oversales activities with a t-statistic of 0.990271 (insignificant).
Implementing an enterprise resource planning system had a coefficient of -0.059696 with a t-
statistic of -1.994763 (significant at 0.05) for overproduction activities. For discretionary expense
cutting, implementing an enterprise resource planning system had a coefficient of -0.039679 with
a t-statistic of -1.628372 (significant at 0.10).
Table 5. Regression of Enterprise Resources Planning 3 to 5 Years Implementation
Coefficient
(t-statistics)
Variable
≥ 3 Years ERP ≥ 4 Years ERP ≥ 5 Years ERP
Implementation Implementation Implementation
ERP -0.123430 -0.135298 -0.084248
(-2.394775)** (-2.769741)* (-1.897460)***
ROA -0.383522 -0.374815 -0.384269
(-3.614467)* (-3.537498)* (-3.616308)*
SIZE 0.012285 0.013544 0.008572
(0.814060) (0.902323) (0.575833)
GROWTH 0.002869 0.003090 0.004087
(0.148763) (0.160711) (0.211839)
AC -0.003859 -0.003823 -0.003857
(-0.989969) (-0.983539) (-0.988611)
Constant -0.297135 -0.331780 -0.205891
F-stat 3.670596* 4.001687* 3.291933*
Adj R2 0.022205 0.024889 0.019117
*Significant in 0.01
**Significant in 0.05
***Significant in 0.10

Table 5 shows the regression results of the effect of ERP on REM in alternative
implementation periods of ERP. The enterprise resource planning implementation had a coefficient
value of-0.123430 with t-statistics -2.394775 (significant in 0.05) for at least three years of
enterprise resource planning implementation, -0.135298 with t-statistics -2.769741 (significant at
0.01) for at least four years of enterprise resource planning implementation, and -0.084248 with t-
120 Rokhaniyah, Simamora, & Sitoresmi

statistics -1.897460 (significant at 0.10) for at least five years of enterprise resource planning
implementation.
Table 6. Regression of Enterprise Resources Planning Implementation Period on Real Earnings
Management
Variable Coefficient t-statistics
ERP Implementation Period -0.010476 -1.693649**
ROA -0.185150 -1.575488
SIZE -0.024227 -1.169663
GROWTH -0.268191 -3.144071*
AC -2.593275 -9.764069*
Constant 0.930039
F-statistics 15.33312*
Adjusted R2 0.288201
Sample 178 Firm-Years
*Significant in 0.01
**Significant in 0.10

Table 6 shows the regression result of the effect of the enterprise resource planning period
on REM. The implementation period of the enterprise resource planning had a coefficient of -
0.010476 with a t-statistic of -1.693649 (significant at 0.10). The result is consistent with the main
result.
Table 7. Regression of Enterprise Resources Planning on Real Earnings Management
(Suspect vs. Non-Suspect Firms)
Suspect Firms Non-Suspect Firms
Variable
Coefficient t-statistics Coefficient t-statistics
ERP -0.101233 -1.595162*** -0.084176 -1.460938
ROA -2.614492 -8.645000* -0.285327 -2.713944*
SIZE 0.024527 1.370052 0.001216 0.076826
GROWTH 0.030968 0.640259 0.035399 1.776294***
AC -0.272838 -3.272471* -0.003679 -1.009057
Constant -0.246985 0.040391
F-statistics 17.20290* 2.609026**
Adjusted R2 0.128943 0.023115
Sample 248 Firm-Years 341 Firm-Years
*Significant in 0.01
**Significant in 0.05
***Significant in 0.10

Table 7 presents the regression result for the effect of enterprise resource planning on real
earnings management for suspect and non-suspect firms. The enterprise resource planning
implementation for suspect firms had a coefficient of -0.101233 with a t-statistic of -1.595162
(significant at 0.10). For non-suspect firms, implementing an enterprise resource planning system
had a coefficient of -0.084176 with a t-statistic of -1.460938 (insignificant).
Table 8. Autocorrelation and Heteroscedasticity Tests
Test Result Notes
Durbin-Watson Durbin-Watson Value = 1.97233* Free of autocorrelation problem
White Test Chi-Square = 239.4939** There is heteroscedasticity problem
*du = 1.87934 and 4-du = 2.12066
**significant in 0.01

In addition, this study performed a common effect regression as a robustness test.

Autocorrelation and heteroscedasticity tests were conducted to ensure that the regression model
was unbiased. Table 8 shows that Durbin Watson's value was 1.97233 (between du and 4-du). This
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 121

indicates that there was no autocorrelation problem. The chi-square value of the White Test was
239.4939 (significant at 0.01). This finding suggests that there may be a heteroscedasticity
problem. Since the heteroscedasticity problem occurred, this study ran a regression test using the
Huber-White regression test with the heteroscedasticity condition.
Table 9. Huber-White Regression of Enterprise Resources Planning on Real Earnings Management
Variable Coefficient t-statistics
ERP -0.081147 -2.593875*
ROA -1.400869 -3.806373*
SIZE 0.011677 1.158831
GROWTH 0.045781 1.250961
AC -0.006794 -1.674124**
Constant -0.251516
Wald F-statistics 4.373239*
Adjusted R2 0.186978
*Significant in 0.01
**Significant in 0.10

Table 9 presents the result of the Huber-White regression test, indicating that the
implementation of an enterprise resource planning system had a coefficient of -0.081147 with a t-
statistic of -2.593875 (significant at 0.01).
4.2. Real Earnings Management and Enterprise Resource Planning (Main Analysis)
Enterprise resource planning implementation system has a negative effect on real earnings
management. Therefore, this hypothesis is supported. The result is consistent with Paredes &
Wheatley (2018) and Patnaik et al. (2019), who found that the enterprise resource planning system
can reduce real earnings management. There are two factors why enterprise resource planning
implementation reduces real earnings management. First, an enterprise resource planning system
has the advantage of reducing information asymmetry. Integration and real-time information
generated by enterprise resource planning systems are crucial in determining why information
costs are low and why other stakeholders can access high-quality information. When information
asymmetry is low, the potential to engage in REM is also low. Second, the enterprise resource
planning system improves the monitoring role. Integration between and within functional areas
allows internal controls, the board, and shareholders to provide effective oversight of managers,
including the actions of managers in abnormal business activities.
4.3. Real Earnings Management Activities and Enterprise Resource Planning
Enterprise resource planning systems comprise various modules, hardware, and software
applications. It includes complete monetary, human resource, and payroll, order to cash,
manufacture purchase to pay, assignment management, client relationship management, and
device tools modules (Romney & Steinbart, 2018). There is a chance that the enterprise resource
planning system has a different effect on each abnormal activity of oversales, overproduction, or
discretionary expense cutting. This study also examines the effect of implementing enterprise
resource planning on each abnormal activity. Oversales have a negative effect on the value of
abnormal operating cash flow, overproduction has a positive effect on the value of abnormal
production costs, and discretionary expense cutting has a negative effect on the value of abnormal
discretionary expenses.
Based on Table 4, implementing an enterprise resource planning system has no effect on
oversales activities. The implementation of an enterprise resource planning system has a negative
122 Rokhaniyah, Simamora, & Sitoresmi

effect on overproduction activities. For discretionary expense cutting the implementation of

enterprise resource planning systems has a negative effect on discretionary expense-cutting
activities. The effectiveness of implementing an enterprise resource planning system in
constraining real earnings management is more pronounced in overproduction and discretionary
expense-cutting activities compared to oversales.
4.4. Real Earnings Management and Enterprise Resource Planning Implementation
Period
An enterprise resource planning system is not easy to be implemented. It takes time to
implement an enterprise resource planning system adequately. Kováč & Kádárová (2014)
explained that ERP implementation requires a relatively long time. Therefore, the effects of ERP
implementation will be visible within the timeframe of 3-5 years. Table 5 illustrates an alternative
measure of enterprise resource planning implementation in which the effectiveness can be seen
after 3-5 years. The results show that implementing the enterprise resource planning system has a
negative effect on real earnings management for at least three, four, and five years of enterprise
resource planning implementation. The result is consistent with the main result.
Each firm can achieve effective enterprise resource-planning performance in different
implementation periods. A firm's experience implementing enterprise resource planning
determines its optimal performance (Elsayed, Ammar, & Mardini, 2019). In order to avoid bias
from different periods that firms need to get effective enterprise resources planning
implementation results, this study examines the effect of enterprise resources planning
implementation period on REM only for enterprise resources planning implementers. Based on
Table 6, the enterprise resources planning implementation period has a negative effect on real
earnings management. The result is consistent with the main result.
4.5. Suspect vs. Non-Suspect Firms of Real Earnings Management
Roychowdhury (2006) explained that real earnings management is done to avoid negative
earnings (zero earnings target) and beat earnings target (earnings target could be previous
earnings). Since abnormal activities could come from real earnings management behavior or
industry business conditions, this study splits the sample into suspect and non-suspect firms. It
occurred by earnings target beating. Firms that beat earnings targets are classified as real earnings
management suspect firms. Firms that miss earnings targets are classified as non-real earnings
management suspect firms. Two earnings target measures are used: zero earnings and last year's
earnings (Gunny, 2010). The zero earnings target is achieved when the ratio of earnings to assets
ranges from 0-5 percent. The last year's earnings target is achieved when the change in earnings to
assets ratio is between 0-5 percent (Gunny, 2010; Roychowdhury, 2006). Based on Table 7, the
enterprise resource planning system, the implementation of real earnings management has a
negative effect on suspect firms but has no effect on non-suspect firms. Real earnings management
reduction by implementing an enterprise resource planning system is more pronounced for suspect
firms than non-suspect firms.
4.6. Real Earnings Management and Enterprise Resource Planning (Common Effect
Regression Test)
The common effect regression test was used as a robustness test if the random effect
regression result was consistent with the common one. Based on the common effect regression
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 123

analysis, the implementation of an enterprise resource planning system has a negative effect on
real earnings management. The result is consistent with the random effect regression test.

5. CONCLUSION, SUGGESTION, AND LIMITATION

This study examines how implementing an enterprise resource planning system affects
real earnings management. Based on the data analysis, the implementation of an enterprise
resource planning system has a negative effect on real earnings management. This suggests that
the enterprise resource planning system plays a role in reducing information asymmetry and
effective monitoring to constraint real earnings management. Further, the role of implementing an
enterprise resource planning system in reducing real earnings management is more prominent for
overproduction and discretionary expense activities and for suspect firms that beat earnings targets.
The limitation of this study is that it only considers ERP implementers and non-ERP
implementers without considering aspects such as hardware, software, or system performance that
can determine the effectiveness of an enterprise resource planning system. This study provides
implications for firm management to make decisions regarding investments in ERP and enhance
the performance of the implemented ERP, leading to a reduction in real earnings management,
particularly for manufacturing firms in Indonesia.

ACKNOWLEDGEMENT
The authors would like to thank Universitas Tidar for the research funding.

REFERENCES
AlMuhayfith, S., & Shaiti, H. (2020). The Impact of Enterprise Resource Planning on Business
Performance: With the Discussion on Its Relationship with Open Innovation. In Journal
of Open Innovation: Technology, Market, and Complexity (Vol. 6, Issue 3).
https://doi.org/10.3390/joitmc6030087
Alsurayyi, A. I., & Alsughayer, S. A. (2021). The Relationship between Corporate Governance
and Firm Performance: The Effect of Internal Audit and Enterprise Resource Planning
(ERP). Open Journal of Accounting, 10(2), 56–76.
Callao, S., Jarne, J. I., & Wroblewski, D. (2021). A systematic approach to the motivation for
earnings management: A literature review. International Journal of Emerging Trends in
Social Sciences, 10(1), 1–20.
Cohen, J. R., Hoitash, U., Krishnamoorthy, G., & Wright, A. M. (2014). The Effect of Audit
Committee Industry Expertise on Monitoring the Financial Reporting Process. The
Accounting Review, 89(1), 243–273. https://doi.org/10.2308/accr-50585
Dambrin, C., & Grall, B. (2023). Long-term alterations of ERP systems: lasting through
relinquishment and regeneration. Qualitative Research in Accounting & Management,
20(2), 169–200. https://doi.org/https://doi.org/10.1108/QRAM-03-2022-0043
Dehning, B., Sinha, C., & Sinha, P. (2017). Change in Earnings Quality Surrounding ERP
Implementation. Corporate Ownership and Control, 15(1), 8–17.
https://doi.org/10.22495/cocv15i1art1
Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. The Academy of
Management Review, 14(1), 57. https://doi.org/10.2307/258191
124 Rokhaniyah, Simamora, & Sitoresmi

Elsayed, N., Ammar, S., & Mardini, G. H. (2019). The Impact of ERP Utilisation Experience and
Segmental Reporting on Corporate Performance in the UK Context. Enterprise
Information System.
Ermilova, M., & Laptev, S. (2021). Information technology as a tool to improve the efficiency of
the housing market. He International Conference on Innovation, Modern Applied Science
& Environmental Studies (ICIES2020).
Farras, F. A., & Faisal, F. (2020). The influence of good corporate governance and voluntary
disclosure on information asymmetry. Diponegoro Journal of Accounting, 9(4).
https://ejournal3.undip.ac.id/index.php/accounting/article/view/29070
Febrianto, T., & Soediantono, D. (2022). Enterprise Resource Planning (ERP) and Implementation
Suggestion to the Defense Industry: A Literature Review. Journal of Industrial
Engineering & Management Research, 3(3), 1–16.
Filip, A., Jeanjean, T., & Paugam, L. (2015). Using Real Activities to Avoid Goodwill Impairment
Losses: Evidence and Effect on Future Performance. Journal of Business Finance &
Accounting, 42(3–4), 515–554. https://doi.org/10.1111/jbfa.12107
Goh, J., Lee, H.-Y., & Lee, J.-W. (2013). Majority Shareholder Ownership and Real Earnings
Management: Evidence from Korea. Journal of International Financial Management &
Accounting, 24(1), 26–61. https://doi.org/10.1111/jifm.12006
Gunny, Katherine A. (2010). The Relation Between Earnings Management Using Real Activities
Manipulation and Future Performance: Evidence from Meeting Earnings Benchmarks.
Contemporary Accounting Research, 27(3), 855–888. https://doi.org/10.1111/j.1911-
3846.2010.01029.x
Hartono, P. V. C., Suganda, T. R., & Cahyadi, S. (2018). Accrual and real earnings management
through cash flows operating activity towards market performance. Jurnal Aplikasi
Manajemen, 16(3), 392 – 401.
Heninger, W. G., Johnson, E. N., & Kuhn, J. R. (2018). The Association between IT Material
Weaknesses and Earnings Management. Journal of Information Systems, 32(3), 53–64.
https://doi.org/10.2308/isys-51884
Jensen, M., & Meckling, W. H. (1976). Theory of Firm: Managerial Behavior, Agency costs and
Ownership Structure. Financial Economics. Journal of Financial Economics, 3(4), 305–
360.
Kamdjoug, J. R. K., Bawack, R. E., & Tayou, A. E. T. (2020). An ERP success model based on
agency theory and IS success model. Business Process Management Journal, 26(6), 1577–
1597. https://doi.org/10.1108/BPMJ-04-2018-0113
Karin, K., Kusgianto, E., & Jogi, Y. (2020). The Effect of Information Asymmetry on Earnings
Management with Corporate Governance as Moderating Variable. Jurnal Akuntansi
Bisnis, 8(1).
Khaled, R., Khatima, L., & Ibtissem, M. M. (2021). The Impact of enterprise resources planning
(ERP) on knowledge sharing case study on the national insurance corporation Saa-
Ouargla. Journal of Economic Sciences, Management & Commercial Sciences (JESMCS),
14(2), 296–310.
Kováč, J., & Kádárová, J. (2014). Supporting of the Company Strategy Through ERP System. Acta
Mechanica Slovaca, 18(1), 32–36. https://doi.org/10.21496/ams.2014.004
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 125

Lateef, S. A., Rasid, N. N. M., Mustapha, U. A., & Ado, A. B. (2019). The impact of earnings
management as for the Nigerian Listed firms financial reporting quality on information
asymetry. Jurnal Aplikasi Manajemen, Ekonomi, Dan Bisnis, 4(1).
Leggett, D. M., Parsons, L. M., & Reitenga, A. L. (2015). Real Earnings Management and
Subsequent Operating Performance. IUP Journal of Operations Management, 15(4), 7–
32.
Luo, G., Wang, K. T., & Wu, Y. (2023). Does the market reward meeting or beating analyst
earnings forecasts? Empirical evidence from China. China Accounting and Finance
Review, 25(2), 184–219. https://doi.org/10.1108/CAFR-06-2022-0069
Marsudi, A., & Pambudi, R. (2021). The Effect of Enterprise Resource Planning (ERP) on
Performance with Information Technology Capability as Moderating Variable. Journal of
Economics, Business, & Accountancy Ventura, 24(1), 1–11.
Martins, J. L., & Santos, C. (2021, January 1). The influence of ERP systems on organizational
aspects of accounting: case studies in Portuguese companies. Accounting Research
Journal; Emerald Publishing Limited. https://doi.org/10.1108/ARJ-07-2020-0212
Morris, J. J., & Laksmana, I. (2010). Measuring the Impact of Enterprise Resource Planning (ERP)
Systems on Earnings Management. Journal of Emerging Technologies in Accounting,
7(1), 47-71. https://doi.org/10.2308/jeta.2010.7.1.47
Mthupha, T. P., & Bruhns, E. (2022). Human resource factors affecting enterprise resource
planning acceptance. Journal of Human Resource Management, 20(1–11).
Nanda, S. T., Zenita, R., Salimiah, N., & Adino, I. (2022). Earnings management: the moderating
effect of corporate governance and the effect management overconfidence. Jurnal Ilmiah
Ekonomi Dan Bisnis, 19(11), 11–19.
Pangaribuan, H., Sihombing, J., Sunarsi, D., & Manurung, D. T. H. (2022). The Internal Control
Effort in Improving Company Performance. Kontigensi: Scientific Journal of
Management, 10(1). https://doi.org/https://doi.org/10.56457/jimk.v10i1.267
Paredes, A. A. P., & Wheatley, C. M. (2018). Do Enterprise Resource Planning Systems (ERPs)
Constrain Real Earnings Management? Journal of Information Systems, 32(3), 65–89.
https://doi.org/10.2308/isys-51760
Patnaik, B. C. M., Satpathy, I., & Debnath, N. C. (2019). The Effect of ERP System
Implementation on Real Earnings Management: Evidence From an Emerging Economy.
International Journal of Civil Engineering and Technology, 10(3), 588–603.
Putra, D. G., Rahayu, R., & Putri, A. (2021). The Influence of Enterprise Resource Planning (ERP)
Implementation System on Company Performance Mediated by Organizational
Capabilities. Journal of Accounting and Investment, 22(2), 222–240.
https://doi.org/https://doi.org/10.18196/jai.v22i2.10196
Rao, P. N. (2017). Strategic ERP [Enterprise Resource Planning] System Planning in Alignment
with Business Planning for its Improvements. Global Journal of Computer Science and
Technology, 17(2), 13–23.
Romney, M. B., & Steinbart, P. J. (2018). Accounting Information System (14th ed.). Pearson
Education.
Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of
Accounting and Economics, 42(3), 335–370.
https://doi.org/10.1016/j.jacceco.2006.01.002
126 Rokhaniyah, Simamora, & Sitoresmi

Salur, M., & Kattar, W. K. (2021). The Impact of Enterprise Resource Planning (ERP) on The
Audit in The Context of Emerging Technologies. Journal of Economics Public Finance
Business, 4, 115–123. https://doi.org/10.46737/emid.1032735
Silva, T., Marques, R. P., & Azevedo, G. (2023). The Impact of ERP Systems in Internal Auditing:
The Portuguese Case. Procedia Computer Science, 219, 963–970.
https://doi.org/https://doi.org/10.1016/j.procs.2023.01.373
Simamora, A. J., Rokhaniyah, S., & Atika, A. (2022). CEO Characteristics, Enterprise Resource
Planning, and Performance. Seminar Nasional Fakultas Ekonomi Universitas Tidar, 112–
125.
Sislian, L., & Jaegler, A. (2022). Linkage of blockchain to enterprise resource planning systems
for improving sustainable performance. Business Strategy & the Environment, 31(3), 737–
750. https://doi.org/https://doi.org/10.1002/bse.2914
Song, L., & Zhao, Z. (2021). New Model Construction of Enterprise Information Resource
Management under e-Commerce. Mobile Information Systems, 2021, 4776555.
https://doi.org/10.1155/2021/4776555
Suhadak, S., Nawari, N., & Wardhani, D. K. (2022). Corporate Governance, Big4 and Earnings
Management. Jurnal Akuntansi dan Bisnis, 22(1).
https://jab.fe.uns.ac.id/index.php/jab/article/view/721
Tabassum, N., Kaleem, A., & Nazir, M. S. (2014). Real Earnings Management and Future
Performance. Global Business Review, 16(1), 1–14.
Tarigan, L. Y. P. (2019). Deferred tax expensesas earnings management indicators. Journal of
Accounting and Management Innovation, 3(2), 117–130.
Toumeh, A. A. (2022). The Influence of Enterprise Resource Planning System Implementation on
Accrual-Based Earnings Management: Empirical Evidence from Jordan. Global Business
Review, 09721509221116692. https://doi.org/10.1177/09721509221116692
Vorst, P. (2016). Real Earnings Management and Long-Term Operating Performance: The Role
of Reversals in Discretionary Investment Cuts. The Accounting Review, 91(4), 1219–1256.
https://doi.org/10.2308/accr-51281
Wang, X., Bu, L., & Peng, X. (2021). Internet of things adoption, earnings management, and
resource allocation efficiency. China Journal of Accounting Studies, 9(3), 333–359.
https://doi.org/10.1080/21697213.2021.2009180
Watts, R. L., & Zimmerman, J. L. (1990). Positive Accounting Theory: A Ten Year Perspective.
The Accounting Review.
Wibowo, A. S., & Fuad, F. (2018). Growth Illusion in The Indonesia Stock Exchange: Relationship
Between Earnings Management and Firm Value. The Indonesian Journal of Accounting
Research, 21(1). https://doi.org/http://doi.org/10.33312/ijar.336
Wikartika, I., & Akbar, F. S. (2019). Analysis of Corporate Governance Based on The Agency
Theory. 4 Th International Seminar of Research.
Wulandari, T. R., & Setiawan, D. (2023). Ownership concentration, foreign ownership and
tunneling in Indonesia. Rajagiri Management Journal, 17(1).
Xu, H., Guo, S. (Yuanyaun), Haislip, J. Z., & Pinsker, R. E. (2019). Earnings Management in
Firms with Data Security Breaches. Journal of Information Systems, 33(3), 267–284.
https://doi.org/10.2308/isys-52480
Enterprise Resource Planning and Real Earnings Management: A Study in Indonesia 127

Zerbino, P., Aloini, D., Dulmin, R., & Mininno, V. (2021). Why enterprise resource planning
initiatives do succeed in the long run: A case-based causal network. PLoS ONE, 16(12).
https://doi.org/https://doi.org/10.1371/journal.pone.0260798