Good Corporate Governance, Earnings Management and Profit Optimization to Increase the Competitiveness of Sharia Commercial Banks Industry

This study was conducted to determine the effect of Good Corporate Governance (GCG) on earnings management and profit as an effort to improve the competitiveness of Islamic banks in Indonesia. The study was conducted on 11 Islamic public banks registered with Financial Services Authority using data from the period 2013-2017. Methods of data analysis are using PLS-SEM with WrapPLS 6.0 statistical tools. The results of the study showed that the GCG elements of the sharia supervisory board and the board of commissioners did not affect earnings management, while the audit committee element affected earnings management. This condition shows that the shariah supervisory board and board of commissioners have not optimally influenced the practice of earnings management and supported the increase in the competitiveness of Islamic banks in Indonesia, but the audit committee contributed to controlling the practice of earnings management. GCG elements of the sharia supervisory board and audit committee have no effect on the increase in company profits while the board of commissioners has an influence on increasing corporate profits. This condition shows that the shariah supervisory board and audit committee have not optimally influenced corporate profits to support the increase in the competitiveness of Islamic banks in Indonesia while the board of commissioners contributes to optimizing corporate profits. The test results also show that earnings management has a positive effect on increasing corporate profits. The GCG element of the audit committee is able to play a role in encouraging the implementation of earnings management so that it influences the increase in corporate profits. Profit optimization through increasing the role of GCG can increase the competitiveness of Sharia Commercial Banks