EARNINGS MANAGEMENT : AN ANALYSIS OF FREE CASH FLOW, FINANCIAL DISTRESS AND LEVERAGE

The aim of this study is to analyze and obtain empirical evidence regarding the influence of free cash flow, financial
distress, and leverage on earnings management. This empirical research with a population of banking companies listed
on the Indonesia Stock Exchange from 2019 to 2021. The data used in this research was secondary data in the form of
financial information from the financial statements and annual reports. There were 26 samples that were previously
selected using the purposive sampling method with a total of 78 data. This research data was processed using WarpPLS
software. The result shows that free cash flow has a negative effect on earnings management, financial distress has a
positive effect on earnings management, and the last result is that leverage has a positive effect on earnings management.
The result of this study would provide a valuable explanation of the correlation between variables and would give
relevant views to regulators in order to promote public confidence in the reliability of financial reporting.