This study aims to examine and analyze the
effect of profitability, leverage, firm size and audit
quality on earnings management in the Basic and
Chemical Industrial Sector Companies. Research data
is annual financial report for 5 years observation period
(2013 until 2017). The sampling method used was
purposive sampling. From a population of 66 companies,
37 companies met the criteria to be the sample. The
method of analysis used in this study is panel data
regression. The results showed that profitability,
leverage, firm size and audit quality simultaneously are
having significant influence to earnings management.
Partially, profitability has positive significant effect on
earnings management, while leverage has positive but
not significant effect on earnings management. Firm
size and audit quality are having negative and not
significant influence on earnings management.
Profitability is the only significant variable in
influencing earnings management.
Keywords : Profitability, Firm Size, Audit Quality, Earnings Management, Leverage