The Effect of Tax Planning, Earning Power and Profitability on Earnings Management in Plantation Companies Listed on the Indonesia Stock Exchange

• Renika Hasibuan

  Faculty of Economics and Business, Doctoral Program in Accounting Science, Universitas Sumatera Utara, Medan, Indonesia

  https://orcid.org/0000-0002-6404-8180 (unauthenticated)

• Febriana Roosmawati

  Faculty of Economics and Business, Doctoral Program in Accounting Science, Universitas Sumatera Utara, Medan, Indonesia

• Iskandar Muda

  Faculty of Economics and Business, Doctoral Program in Accounting Science, Universitas Sumatera Utara, Medan, Indonesia

  https://orcid.org/0000-0001-6478-9934 (unauthenticated)

• Fahmi N. Nasution

  University of North Sumatra

  https://orcid.org/0000-0002-9169-5658 (unauthenticated)

• Noor Marini Haji Abdullah

  University UiTM Cawangan Kelantan, Malaysia

  https://orcid.org/0000-0002-9502-6013 (unauthenticated)

This study aims to examine the effect of tax planning, earning power, and profitability on earnings management in plantation companies listed on the Indonesia Stock Exchange during the period 2020–2022. The theoretical foundation is based on Agency Theory, which suggests that managers may engage in earnings manipulation to align reported performance with stakeholder expectations or personal incentives. Earnings management is analyzed as a function of tax planning, earning power, and profitability. Using a quantitative descriptive approach and purposive sampling technique, 48 observations from 16 plantation companies were analyzed using multiple linear regression. The findings reveal that tax planning has a significant negative effect on earnings management, indicating that lower levels of tax planning are associated with higher earnings manipulation. Conversely, earning power and profitability were found to have no significant individual effect. However, the three variables jointly have a significant impact on earnings management. These results suggest that while effective tax planning can constrain earnings manipulation, high earning power and profitability alone do not necessarily motivate managers to engage in or avoid such practices. This highlights the importance of strengthening corporate governance and financial transparency, particularly in sectors characterized by income volatility and complex tax environments.

1. Renika Hasibuan, Faculty of Economics and Business, Doctoral Program in Accounting Science, Universitas Sumatera Utara, Medan, Indonesia

   Renika Hasibuan is a Doctoral student in the Accounting Science Program, Faculty of Economics and Business, Universitas Sumatera Utara (USU), Indonesia. She has published numerous papers in national and international journals. In addition to her academic research, she also serves as a lecturer at the Faculty of Economics and Business, Universitas Sari Mutiara Indonesia, in the Accounting Study Program.

2. Febriana Roosmawati, Faculty of Economics and Business, Doctoral Program in Accounting Science, Universitas Sumatera Utara, Medan, Indonesia

   Febriana Roosmawati is a Doctoral student in the Accounting Science Program, Faculty of Economics and Business, Universitas Sumatera Utara (USU), Indonesia. She has published numerous papers in national and international journals. In addition to her academic research, she also serves as a lecturer at the Institut Teknologi Sawit Indonesia, contributing to the development of accounting education in the plantation and agribusiness sector.

3. Iskandar Muda, Faculty of Economics and Business, Doctoral Program in Accounting Science, Universitas Sumatera Utara, Medan, Indonesia

   Prof. Dr. Iskandar Muda is a Professor in Accounting at Universitas Sumatera Utara, Indonesia. His expertise lies in financial accounting, auditing, and forensic accounting. He has supervised many doctoral students and is actively involved in research related to earnings management and sustainability reporting.

4. Fahmi N. Nasution, University of North Sumatra

   Dr. Fahmi N. Nasution is a Lecturer at Universitas Sumatera Utara and an active researcher in the fields of management accounting and performance measurement. He has contributed to several research projects focusing on public sector accounting and strategic cost management.

5. Noor Marini Haji Abdullah, University UiTM Cawangan Kelantan, Malaysia

   Assoc. Prof. Dr. Noor Marini Haji Abdullah is an academic at Universiti Teknologi MARA (UiTM) Cawangan Kelantan, Malaysia. Her research background includes taxation, accounting information systems, and cross-country accounting studies. She has collaborated on research projects across ASEAN, including Indonesia and Malaysia.

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