Abstract

Concentrated ownership is often an issue of long discussion by researchers. They have different perspectives where concentrated shareholders effectively control earnings management. Conversely, concentrated shareholders encourage emerging earnings management. Therefore, this study aims to examine the effect of big shareholders on earnings management in firms listed on the Indonesian stock exchange for 2013-2021. A total of 2,238 firm-year observations were analyzed using multiple and subgroup linear regression. This study proves that big or controlling shareholders positively affect earnings management. This study also finds that big or controlling shareholders participate more in earnings management on loss than non-loss firms. These results indicate that big shareholders do not want their big investments lost. If this happens, with their power control, they pressure managers to manage earnings. These findings should be a warning for investors, regulators, and other stakeholders to give more attention to concentrated firms in terms of earnings management.