The Influence of Internal Control and External Financing Activities on Earnings Management: Evidence from Indonesian State-Owned Enterprises (2020–2023)

This study investigates the influence of internal control and external financing activities on earnings management within Indonesian state-owned enterprises (SOEs) during 2020–2023. Using a quantitative approach with purposive sampling, the research analyzes 164 firm-year observations from non-financial SOEs listed on the Indonesia Stock Exchange. Internal control is measured using the COSO framework, while external financing is proxied by the debt-to-assets ratio. Earnings management is assessed using the Modified Jones Model. The findings reveal that stronger internal control significantly reduces earnings management, while greater reliance on external financing increases its likelihood. These results highlight the importance of robust financial governance in mitigating opportunistic managerial behavior, particularly in highly leveraged government-linked firms.