Relationship Between Ownership Concentration, Firm Size, and Earnings Quality in Indonesian Companies

This study aimed to investigate the influence of ownership concentration and firm size on earnings quality in Indonesian companies. Research about the influence of ownership concentration and firm size on earnings quality still provides mixed results. Therefore, it became important to conduct research about it, especially in the context of Indonesian companies. This study used the alignment effect hypothesis as a basis for hypothesis development. The sample of this study consists of 92 Indonesian companies from 2013–2018, with a total of 522 observations. The data analysis technique is multiple regression analysis. The result of this study showed that ownership concentration had a positive influence on earnings quality. In contrast, firm size had no influence on earnings quality. In conclusion, the result of this study supported the alignment effect hypothesis, stating that the interest of the majority shareholder is aligned with that of the minority shareholder, therefore improving earnings quality.