Navigating Uncertainty: Earnings Management, Annual Report Sentiment, and Corporate Governance in Indonesia

Iman Harymawan; Nadia Klarita Rahayu; Hadrian Geri Djajadikerta

doi:10.14414/tiar.v16i2.4716

Vol. 16 No. 2 (2026), Articles

Vol. 16 No. 2 (2026) Pages 269-284

Navigating Uncertainty: Earnings Management, Annual Report Sentiment, and Corporate Governance in Indonesia

Iman Harymawan⁺⁻
Nadia Klarita Rahayu⁺⁻
Hadrian Geri Djajadikerta⁺⁻

Iman Harymawan

Department of Accounting, Universitas Airlangga, Surabaya, Jawa Timur, Indonesia

Nadia Klarita Rahayu

Department of Accounting, Universitas Airlangga, Surabaya, Jawa Timur, Indonesia

Hadrian Geri Djajadikerta

Accounting Department, Edith Cowan University, Australia

DOI: 10.14414/tiar.v16i2.4716

Published 2026-08-17

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Keywords

Annual Report Sentiment
Covid-19
Earnings Management
Governance

How to Cite

Harymawan, I., Rahayu, N. K., & Djajadikerta, H. G. (2026). Navigating Uncertainty: Earnings Management, Annual Report Sentiment, and Corporate Governance in Indonesia. The Indonesian Accounting Review, 16(2), 269-284. https://doi.org/10.14414/tiar.v16i2.4716

Abstract

This study investigates how companies managed their earnings during the COVID-19 pandemic, focusing on Indonesia from early 2020. The non-financial sample is drawn from the Indonesia Stock Exchange for 2018-2019, utilizing the ordinary least square model with fixed effects and a cluster approach. Coarsened exact matching in STATA 16.0 is employed for additional analysis. Findings reveal that during the pandemic, companies engaged in earnings management exhibited negative sentiment in their annual reports for the following year. Corporate governance, exemplified by independent commissioners and risk management committees, proves instrumental in mitigating sentiment issues. This study contributes significantly to corporate reporting research, offering vital insights for decision-makers shaping effective and country-specific policies amid the ongoing Covid-19 outbreak, particularly in emerging markets like Indonesia, where financial stability, transparency, and robust corporate governance are crucial for ensuring economic recovery, sustaining growth, maintaining investor confidence, and supporting long-term economic resilience, sustainable development, and future stability.

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