Volume 4, Issue 7, July – 2019 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

The Effect of Earning Management, Profitability, and

Firm Sizeon Audited Financial Statement Timeliness
Nurainun Bangun
Faculty of Economy
Tarumanagara University Jakarta

Abstract:- The purpose of this study is to obtain Signaling Theory. In addition to being used as a form of
empirical evidence regarding the effect of earning corporate responsibility, financial statements also play an
management, profitability, and firm size on audited important role in knowing the performance and financial
financial statement timeliness at trading, service, and condition of the company, as a basis for preparing
investment companies listed in Indonesia Stock company operational planning, and can be used as a basis
Exchange during 2015-2017. The sampling method for decision making and assisting management in
used in this study to collect research sample is controlling the company.
purposive sampling method, with the result that 41
trading, service, and investment companies listed in The financial statements of the public’s companies
Indonesia Stock Exchange during 2015-2017 collected that are available on the capital market have important
as the research sample. Data used for this study is functions for the stakeholders of the companies.
obtained from audited financial statement for the year Information which is contained in the financial statements
ended December 31st during 2015-2017. Binary logistic can help stakeholders in decision making. The importance
regression is used to test the hypothesis using SPSS of financial statements as information that helps in making
23.0. This study’s result shows that earning decisions requires companies to prepare financial
management and profitability have significant effect on statements properly in accordance with the applicable
audited financial statement timeliness, while firm size regulations. One of the criteria for a good financial
does not have significant effect on audited financial statement is that a financial statement has to be relevant.
statement timeliness. Financial statements are called relevant when the
information in the financial statements can help the
Keywords:- Audited Financial Statement Timeliness, financial statements’ users to evaluate the past or present
Earning Management, Profitability, Firm Size. events and predicting the future, so that it can influence
user decisions. Good financial statements must be able to
I. INTRODUCTION help users in making decisions. The function of financial
statements as a basis for making decisions requires
Otoritas Jasa Keuangan (OJK) states that Indonesia's companies to submit their financial statements in a timely
capital market has developed very rapidly. The rapid manner. If the company is late in submitting its financial
development of the Indonesian capital market invites statements, the information in the financial statements
investors from both inside and outside the country to invest becomes irrelevant and cannot be used as a basis for users
in Indonesia. At present, the capital market has become to make decisions.
one of the long-term funding sources for the government,
for example for infrastructure development. Indonesia's Public companies in Indonesia have an obligation to
capital market which is starting to develop will certainly deliver their financial reports in time in accordance with
increase competition and challenges, not only from within the Directors of the Jakarta Stock Exchange Decree
the country, but also globally. Number Kep-306 / BEJ / 07-2004 concerning Regulation
Number IE concerning Obligation to Submit Information
The tight competition in the Indonesian capital Chapter III.1.6.2, namely annual financial reports must be
market requires companies to have high competitiveness submitted in the form of annual financial statements, no
and be more transparent in terms of financial statements. later than the end of the third month after the period end of
According to PSAK 1 of 2015, financial statements are a the annual financial report. However, there are still many
structured presentation of the financial position and public companies that are not timely in submitting their
financial performance of an entity. Financial statement is a annual financial reports, thus causing asymmetry of
part of the financial reporting process. The objective of the information between management (agents) and
preparation of the financial statements done by companies stakeholders (principal). The company does not pay
is as a form of corporate accountability to corporate attention to the principal needs of the information which is
stakeholders, both internal parties (company management presented by the company in financial statements, where
and employees) and external companies (creditors, the information must be relevant to be used as a basis for
investors, governments, suppliers, customers, and the decision making. This is in accordance with the Agency
wider community). Financial statements as a form of Theory.
corporate responsibility give signals to stakeholders
regarding company performance, in accordance with

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ISSN No:-2456-2165
There are several factors that can affect timeliness later than the end of the third month after the date of the
audited financial statements, namely earnings annual financial report. The company is said to be not
management, profitability, and firm size. These variables timely if it submits audited annual financial statements
were chosen because of differences in the results of beyond the limit of three months after the date of the
previous studies. This research was conducted to annual financial report (Directors of the Jakarta Stock
reexamine whether earnings management, profitability, Exchange Decree Number Kep-306 / BEJ / 07-2004).
and firm size affect the audited financial statement
timeliness. D. Earning Management
Earning management is the effort of the company's
II. LITERATURE REVIEW management to intervene in the company's financial
statements, thus affecting the information contained in
A. Agency Theory financial statements. According to Scott (2015), earnings
Agency theory is a theory that studies the conflicts management can be done with 4 types of patterns, namely
that occur between the principal and the agent. Agency taking a bath, income minimization, income maximization,
theory describes shareholders as principals and company and income smoothing. Earning management can be
management as agents. Company management is a party measured using Discretionary Accruals using the Modified
employed by shareholders to work in the interests of Jones model. Company management always expects good
shareholders (Scott, 2015). The shareholders then delegate corporate performance results. When the results obtained
some of the power to company management to make do not meet expectations, company management will tend
decisions. Therefore, company management must account to do earnings management. Companies that conduct
for all its efforts to shareholders. However, often earnings management on their financial statements tend to
individuals in the company (agents) tend to act for their be late in submitting annual financial reports. Companies
own sake. The power to take decisions delegated by the need time to intervene in financial statements, whether it is
principal to the agent is often misused by the agent to raising, decreasing, or leveling profits, so companies that
achieve the goal in the agent's personal interest. This conduct earning management need more time to complete
encourages the emergence of conflicts of interest among financial statements. The financial statements that are
the principal and the agent. completed later will delay the implementation of the audit
process, and then end in the late submission of annual
The management of the company as an agent is a financial reports. This is reinforced by the results of the
party that is in the company directly, so that the study of Seni and Mertha (2015) which states that earnings
management of the company knows more about the ins and management has a negative effect on audited financial
outs of the company compared to shareholders who rarely statement timeliness. However, this is not in line with the
even directly in the company, when the agent has more research results of Noviansyah (2016) which states that
information about the company than the principal, there is earnings management does not affect the audited financial
a situation of information imbalance (asymmetry statement timeliness.
information).
E. Profitability
B. Signaling Theory Profitability is one dimension of a company's
Signaling theory explains that good financial financial performance that can show the company's ability
statements are signals or signs that the company is to generate profits (Nurfauziah, 2016). Profitability shows
operating well (Ross, 1977). The management of the the ability of a company to generate profits, which can be
company knows more about the ins and outs of the seen from the rate of return (return) obtained by the
company compared to the stakeholders of the company. company from asset turnover. The profitability of a high
This happens because company management is the party company is considered good news for the public, and
that runs the company's operations directly. According to conversely low profitability or loss of a company is
Brigham and Houston (2013), asymmetry information is a considered bad news for the public (Ha, Hung, and
situation where company management knows more and Phuong, 2018). Several types of ratios that can be used to
better information about the company compared to measure profitability according to Gitman and Zutter
shareholders or company investors. The signal process (2015) are Gross Profit Margin, Return on Assets, Return
(information delivery) aims to reduce the asymmetry on Equity, and Per Share Earnings. This study uses Return
information received by the company's stakeholders (Scott, on Assets (ROA) to measure the level of profitability. The
2015). Publication of the company's financial statements is high profitability of the company shows a good condition
one form of the company's business in providing signals to of the company, so it gives a good signal to the users of
the public and reducing the asymmetry of information that corporate financial information. The good condition of the
occurs. company which is described by high profitability is
considered good news for the public, this shows that the
C. Audited Financial Statement Timeliness company does not have things that are hidden from the
Audited financial timeliness statement can be public, so that the submission of company financial
assessed from the date of submission of audited annual statements is not hampered and can be delivered on time.
financial statements. The company is said to be on time On the contrary, the low profitability of the company
when submitting audited annual financial statements no shows that the condition of the company is not good, so

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Volume 4, Issue 7, July – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
that it gives a bad signal to the users of corporate financial  H2: Profitability has a positive effect on audited
information. Poor company conditions usually hinder the financial statement timeliness
delivery of company financial statements because of things  H3: Firm size has a positive effect on audited financial
that the company wants to hide from external companies to statement timeliness
maintain the company's image. This is reinforced by the
results of Hung and Phuong (2018), Pradipta and Suryono III. METHODOLOGY
(2017), Gulec (2017), and Marathani (2013) which state
that profitability has a positive effect on audited financial The population of this study is all trade, service and
statement timeliness. However, this is not in line with the investment companies listed on the Indonesia Stock
results of research by Sufiyati (2017), Riswan and Saputri Exchange during 2015-2017. The data to be used in this
(2015), and Mardyana (2013) which states that profitability study is panel data using purposive sampling technique in
does not affect audited financial statement timeliness. sampling. The criteria used in selecting samples are:
a. Trading, service and investment companies registered
F. Firm Size on the Indonesia Stock Exchange for 4 consecutive
Firm size or company size is related to the amount of years, namely in 2014-2017
resources owned by a company. The size of a company can b. Companies that submit annual financial reports in full
be seen from several aspects, total assets, total sales, and in the 2014-2017 accounting period
the number of workers (Riswan & Saputri, 2015). This c. Financial statements of trading, service and investment
study uses Ln Total Assets to measure company size. This companies that expire on December 31 which have
means the greater the assets (assets) owned by a company, been audited by public accountants
the greater the size of the company. Companies that have a d. Trading, service and investment companies that have
lot of assets have more information sources, more not suffered losses during 2015-2017
accounting staff, have more sophisticated information e. Trading, service and investment companies that do not
systems, have strong internal control systems, and get more carry out delisting and relisting during 2015-2017
supervision of investors, regulators, and also public f. Trading, service and investment companies that present
spotlight. In addition, large companies will receive greater financial statements in Rupiah
attention than small companies, so the company will strive g. The financial statements of trading, service and
to maintain the company's image in the eyes of the public. investment companies that contain the required data are
Companies that have large sizes will be able to deliver in accordance with the operationalization of the
financial reports in a timely manner because they have variables in this study
more information sources, more accounting staffs, more h. Companies whose annual financial report submission
sophisticated information systems, and strong internal dates for 2015-2017 are listed on the IDX. The number
control systems. In addition, companies that have a large of companies that meet the sample selection criteria are
size will maintain the company's image because of the 41 companies.
supervision of investors, regulators, and public spotlight,
so that the company will deliver financial reports in a The variables used in this study are financial audited
timely manner. This is reinforced by the results of research timeliness statement (Y) as the dependent variable and
by Sufiyati (2017), Pradipta and Suryono (2017), Gulec earnings management (X1), profitability (X2), and firm
(2017), and Marathani (2013) which states that firm size size (X3) as independent variables.
has a positive effect on audited financial statement
timeliness. However, this is not in line with the results of  Audited Financial Statement of Timeliness
research by Riswan and Saputri (2015) which states that Audited financial statements of timeliness in this
firm size does not affect the audited financial statement study were measured using a dummy variable
timeliness. (Noviansyah, 2016 p. 3), where:
a. Companies that are timely in submitting annual financial
The framework in this study is illustrated below: reports are valued at one
b. Companies that are not timely in submitting annual
financial reports are assessed as zero

 Earning Management
Earning management in this study was measured
using Discretionary Accruals using the Modified Jones
model. The model is written as follows (Noviansyah, 2016,
p. 4):
Fig 1:- Illustration 1 Framework
𝑇𝐴𝐶𝑖,𝑡 = 𝑁𝐼𝑖,𝑡 − 𝐶𝐹𝑂𝑖,𝑡
The hypotheses of the models built above are as
follows: Total value of accruals (TAC) can be estimated using
 H1: Earning management has a negative effect on the Ordinary Least Square (OLS) regression equation as
audited financial statement timeliness follows:

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𝑇𝐴𝐶𝑖,𝑡 1 ∆𝑆𝐴𝐿𝐸𝑆 𝑃𝑃𝐸  Firm Size
= 𝛼1 ( ) + 𝛼2 ( ) + 𝛼3 ( ) Firm size in this study was measured using Ln Total
𝑇𝐴𝑖,𝑡−1 𝑇𝐴𝑖,𝑡−1 𝑇𝐴𝑖,𝑡−1 𝑇𝐴𝑖,𝑡−1
Assets (Bassiouny, 2016, p. 93):
Non-discretionary accruals can be calculated with the
following formula, by re-entering the coefficient α that has 𝑆𝑖𝑧𝑒 = 𝐿𝑛 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
been obtained:
All research data will be analyzed using descriptive
1 ∆𝑆𝐴𝐿𝐸𝑆 − ∆𝑅𝐸𝐶 statistical tests to see an overview of the research sample.
𝑁𝐷𝐴𝑖,𝑡 = 𝛼1 ( ) + 𝛼2 ( ) The research data will be processed using the SPSS version
𝑇𝐴𝑖,𝑡−1 𝑇𝐴𝑖,𝑡−1 23.0 program using the method of multiple logistic
𝑃𝑃𝐸𝑖,𝑡 regression (binary logistic regression) using a confidence
+ 𝛼3 ( )
𝑇𝐴𝑖,𝑡−1 level of 95%.

Discretionary Accruals (DA) can further be calculated with The tests carried out in this study included
the following formula: multivariate testing simultaneously and separately, which
was carried out after conducting feasibility testing of the
𝑇𝐴𝐶𝑖,𝑡 regression model which consisted of Case Processing
𝐷𝐴𝑖,𝑡 = − 𝑁𝐷𝐴𝑖,𝑡 Summary tests, Overall Model Fit tests, Hosmer and
𝑇𝐴𝑖,𝑡−1
Lemeshow Test, Nagelkerke R Square test, and prediction
Information: accuracy test. Then it will be tested simultaneously and see
DAi,t : Discretionary Accrual for a company in period t the partial test on the Variables in the Equation table.
NDAi,t : Non-Discretionary Accrual for a company in
period t IV. RESULTS
TACi,t : Total accruals for a company in period t
NIi,t : Net income / net profit of a company in period t A. Descriptive Statistics Test
CFOi,t : Cash flow from operating activities of a Descriptive statistical tests were conducted to obtain
company in period t an overview of the research data. The results of this test
TAi,t-1 : Total assets of a company in period t-1 will provide an overview of the characteristics of the data
∆SALES : Changes in a company’s earnings in from the sample used. Descriptive statistical test of the
period t compared to period t-1 dependent variable, namely audited financial timeliness
∆REC : Change of a company’s receivables in period t statement which is a dummy variable using the frequency
compared to period t-1 test. Descriptive statistical tests will be conducted on
PPEi,t : Property, Plant and Equipment company I in independent variables, namely earnings management,
period t profitability, and firm size by looking at the mean, standard
deviation, minimum value, and maximum value. The mean
 Profitability is the average value of all samples analyzed during the
Profitability in this study is measured using Return study period. The minimum value is the lowest value of all
on Assets (ROA). ROA is calculated by using the formula study samples during the study period. The maximum
shown below (Brigham and Houston, 2013, p. 110): value is the highest value of all research samples during the
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 study period. While the standard deviation is a value that
𝑅𝑂𝐴 = shows the level of variation in the distribution of research
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
sample data (Yamin & Kurniawan, 2009). The results of
the descriptive statistical test can be seen in the following
two tables:

TIMELINESS (Y)

Frequency Percent Valid Percent Cumulative Percent

Valid 0 77 62.6 62.6 62.6
1 46 37.4 37.4 100.0
Total 123 100.0 100.0
Table 1:- Dependent Variable Descriptive Statistics Test Results (Frequency Test)

Based on the results of descriptive statistical tests The number of companies that were not on time in
using frequency tests on timeliness statement audited delivering annual financial reports reached 62.6% of the
financial variables in Table 1, it can be seen that from 123 total study sample, while the number of companies that
research samples used, 77 companies were not on time in were on time to submit annual financial reports reached
submitting annual financial reports and a number of 46 37.4% of the total study sample.
companies on time in submitting annual financial reports.

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Table 2:- Independent Variables Descriptive Statics Test Results

Based on table 2, the results of the descriptive 17.66056 and a maximum value of 25.13318. Firm size has
statistical test states that the earning management variable an average value of 21.65406 and a standard deviation of
has a minimum value of -0.27452 and a maximum value of 1.63467.
0.63397. Earning management has an average value of
0.01244 and a standard deviation of 0.10205. B. Case Processing Summary
This test is conducted to check whether there are data
Result from the descriptive statistical test in Table 2 / research samples that are not taken into account in
shows that the profitability variable has a minimum value testing. This test is done by looking at the case processing
is 0.00024 and maximum value is 0.41101. The average’s summary. If the total percent obtained in this test reaches
value of the profitability is 0.05219 and the value of 100%, it means that all data / research samples have been
standard deviation is 0.04944. taken into account in testing (Yamin & Kurniawan, 2009,
p. 97). The Case ProcessingSummary test results are as
Result from the descriptive statistical test in Table 2 follows:
shows that the firm size variable has a minimum value of

Table 3:- Case Processing Summary Test Results

The test results in Table 3 show that the amount of regression model (initial condition) and in the condition
data / research samples (N value) is 123 data. Included in after the independent variable is entered into the regression
analysis a number of 123 and a total percent of 100 means model (final condition). This test was conducted with the
that there are 123 data, that is, the entire study sample aim to compare the regression model between before and
(100%) has been calculated in the analysis. Missing cases after the independent variables entered into the regression
amount to 0 and total percent by 0 means that there are no model (Ghozali, 2016).
research data / samples that have no value or are not taken
into account in the analysis. -2 Likelihood log in the initial conditions seen from
the Iteration History table in Block 0: Beginning Block. -2
C. Overall Model Fit The Likelihood log in the final condition is seen from the
The Overall Model Fit test is done to assess the Iteration History table in Block 1: Method = Enter. If there
feasibility of the regression model by looking at the overall is a decrease in the value of the Log Likelihood -2 from the
model (overall model fit). This test is done by looking at initial condition to the final condition, it means that the
the Log Likelihood value of -2. The value of Likelihood regression model after the independent variables entered
Log 2 is seen from 2 conditions, namely in the condition into the regression model is good. The test results of the Fit
before the independent variable is entered into the Overall Model can be seen in the following table:

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ISSN No:-2456-2165

-2 Log Likelihood
Block 0: Beginning Block 162.616
Block 1: Method = Enter 152.201
Table 4:- Overall Fit Model Test Results

The test results in Table 4 show that -2 Log

Likelihood in Block 0 has a value of 162,616. Whereas -2 Table 6:- Determination Coefficient Test Results
Likelihood Log in Block 1 has a value of 152,201. There
was a decrease in the Log Likelihood value of -2, from an The test results in Table 6 show that the Nagelkerke
initial value of 162,616 to 152,201. The decrease in the R Square value is 0.111, which means it is 11.1% variation
value of the Likelihood Log 2 -2 is 10.415. This decrease of the timeliness statement audited financial variables
in the Likelihood Log value -2 indicates that the regression explained by earnings management, profitability, and firm
model is better after the independent variable is entered size variables. While the rest, which is equal to 88.9% is
into the regression model, so that it can be concluded that explained by other variables that affect audited financial
the model is fit or suitable for use in the study. statement timeliness. It can be concluded that the ability of
the independent variable to explain the dependent variable
D. Hosmer and Lemeshow Test of 11.1% and there are other factors outside the regression
Hosmer and Lemeshow Test was conducted to see model (factors not examined) of 88.9% which explain the
whether the model we use using 3 independent variables is dependent variable.
in accordance with empirical data (Yamin & Kurniawan,
2009). This test is used to assess the compatibility among F. The Accuracy of Predictions Test
the regression model and the original data. If the Prediction accuracy tests were conducted to see the
significance value is less than or equal to 0.05, then Ho is level of predictive power from the research regression
rejected because there are significant differences between model used. Prediction accuracy tests will produce a
the model and the original data. If Ho is rejected, it means classification matrix that describes the level of predictive
that the regression model is not fit because the regression power from the research regression model used. The
model cannot explain the data. If the significance value is classification matrix is used to assesthe estimated number
greater than 0.05, then Ho is not rejected because the of true and false research data. This matrix measures the
model is able to explain the original data, so the regression accuracy of the level ofdata of the company's dependent
model is fit and acceptable (Ghozali, 2016). The results of variable regarding timeliness audited financial statements,
the Hosmer and Lemeshow Test are as follows: where the value of 0 is given to companies that are not on
time in submitting annual financial reports and value 1 is
Hosmer and Lemeshow Test given to companies that are timely in submitting annual
Step Chi-square df Sig. financial reports.
1 12.420 8 .133
Tabel 5:- Hasil Hosmer and Lemeshow Test There are 2 possible errors that can occur in testing
the accuracy of these predictions, namely companies that
The test results in Table 5 show that the significance are timely in submitting annual financial reports but are
value of the regression model used in this study is 0.133. predicted not to be on time and companies that are not on
The significance value obtained from this test is greater time in submitting annual financial reports but predicted on
than 0.05 (0.133> 0.05). The result states that the time. The regression model used in the study can be said to
regression model can be used to predict research data. So be a good model if the accuracy value of the predictions is
that it can be said that the regression model is suitable for more than 50%. If the value of predictive accuracy is less
further research. than 50%, then the regression model used in the study is
stated to be incorrect or not good. The results of the
E. Nagelkerke R Square prediction accuracy test for timeliness audited financial
Nagelkerke R Square testing is a test conducted to statements are as follows:
obtain a coefficient of determination. This test was
conducted to show the magnitude of the influence of all the
independent variables used in this study on the dependent
variable. In addition, the Nagelkerke R Square value also
illustrates how much the independent variable can explain
the variation of the dependent variable (Ghozali, 2016).
The results of testing Nagelkerke R Square are as follows:

Table 7:- Prediction Accuracy Test Results

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The test results in Table 7 show that from 77 simultaneously. Separate multivariate testing is done by
company data that are not timely in submitting annual removing the independent variables from the test in stages.
financial reports, it is predicted that a number of 69 data The independent variable issued first is the independent
have been accurately predicted and a number of 8 data are variable which has the greatest significance value, namely
not accurately predicted (having a prediction accuracy rate the firm size variable. The results of multivariate testing
of 89.6%). Whereas, from 46 company data that are timely separately can be seen in the following table:
in delivering annual financial reports, it is predicted that a
total of 32 data have been accurately predicted and 14 data
are not accurately predicted (have a prediction accuracy
rate of 30.4%). The overall percentage result (overall
percentage) of predictive accuracy shows a result of
67.5%, where this value is greater than 50% and close to
100%, which means that the logistic regression model used
has good predictive ability. Table 9:- Separate Multivariate Testing

G. Multivariate Test The results of multivariate testing separately show

Multivariate testing is carried out in 2 stages. The that earnings management variable (X1). has a significance
first stage, multivariate testing was carried out value of 0.009, where the value is smaller than 0.05. This
simultaneously to determine the level of significance of the shows that earnings management variables have a
influence of the independent variables on the dependent significant effect on audited financial statement timeliness.
variable used in the study. If the significance value is Likewise with the profitability variable (X2), where the
greater than 0.05, it means that the independent variable significance value is smaller than 0.05, which is equal to
does not significantly influence the dependent variable 0.006. This shows that the profitability variable has a
significantly. If the significance value is greater than 0.05, significant effect on audited financial statement timeliness.
it means that the independent variable does not
significantly influence the dependent variable significantly. The results of multivariate testing simultaneously and
Conversely, if the significance value is smaller than 0.05, it separately show consistent results, where earnings
means that the independent variable has a significant effect management variables (X1) and profitability (X2) have a
on the dependent variable. The results of multivariate significance value smaller than 0.05. It can be concluded
testing simultaneously can be seen in the following table: that earnings management and profitability variables
significantly influence audited financial statement
timeliness. While the firm size (X3) variable has a
significance value greater than 0.05. So it can be concluded
that the firm size variable does not significantly influence
audited financial statement timeliness.

H. Omnibus Tests of Model Coefficients

Omnibus Tests of Model Coefficients were
conducted to determine the significance of the effect of
Table 8:- Simultaneous Multivariate Testing earning management, profitability, and firm size
simultaneously (together) on audited financial statement
The results of multivariate testing simultaneously in timeliness. Simultaneous test results using the Omnibus
Table 8 show that earnings management variable (X1) has Tests of Model Coefficients are as follows:
value of significance of 0.013. The value of significance is
smaller than 0.05 (0.013 <0.05), meaning that earnings Omnibus Tests of Model Coefficients
management variables significantly influence the audited Chi-square df Sig.
financial statement timeliness. In addition, the results of
Step 1 Step 10.415 3 .015
multivariate testing simultaneously indicate that the
profitability variable (X2) has a value of significance of Block 10.415 3 .015
0.009. The value of significance is smaller than 0.05 (0.009 Model 10.415 3 .015
<0.05), meaning that profitability variables also Table 10:- Simultaneous Test Results
significantly influence audited financial statement
timeliness. Firm size (X3) variable has a significant value Based on Table 10 state that the significance value of
of 0.776. The significant value is greater than (0.05 the simultaneous testing is 0.015. This value is smaller
(0.776> 0.05), meaning that firm size does not significantly than 0.05 (0.015 <0.05), meaning that all the independent
influence audited financial statement timeliness. variables used in this study simultaneously (together)
significantly influence the dependent variable. It can be
The second stage, after conducting multivariate concluded that earning management, profitability, and firm
testing simultaneously, carried out multivariate testing size simultaneously influence the audited financial
separately. This test was conducted to obtain greater statement timeliness. The magnitude of the effect of the
confidence in the results obtained from multivariate testing independent variables simultaneously on the dependent

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 Volume 4, Issue 7, July – 2019 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
variable can be seen in the value of Nagelkerke R Square, on the dependent variable. The partial test results for each
which is equal to 11.1% (Table 6). independent variable on the dependent variable can be seen
from the variables in the equation table. Partial test results
I. Variables in the Equation can be seen in the following table:
Partial testing is done to determine the direction and
significance of the influence of each independent variable

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

Step EARNINGMANAGEMENTX1 -5.870 2.367 6.148 1 .013 .003
1a PROFITABILITYX2 12.542 4.776 6.895 1 .009 279860.956
FIRMSIZEX3 .035 .123 .081 1 .776 1.036
Constant
-1.895 2.642 .515 1 .473 .150

a. Variable(s) entered on step 1: EARNINGMANAGEMENTX1, PROFITABILITYX2, FIRMSIZEX3.

Tabel 11:- Partial Test Results

Based on partial testing using multiple logistic The test results partially show that the profitability
regression analysis in Table 11, logistic regression variable has a B value of 12,542 with a significance value
equations for this study can be formulated, namely: of 0.009, where this value is smaller than 0.05 (0.009
<0.05). It can be interpreted that profitability has a
𝑇 significant positive effect on audited financial statement
ln (1−𝑇) = −1.895 − 5.87 X1 + 12.542 X2 + 0.035 X3
timeliness. This indicates that the H2 of this study was
accepted.
Based on the above equation, the value -1.895 is
obtained as a constant value. It can be concluded that if the
The test results partially show that the firm size
earnings management value, profitability, and firm size are
variable has a B value of 0.035 with a significance value of
assumed to be constant or constant, then it is likely that the 0.776, where this value is greater than 0.05 (0.776> 0.05).
company will prepare annual financial statements in a It can be interpreted that firm size does not significantly
timely manner and will decrease by 1,895. influence audited financial statement timeliness. This
shows that the H3 of this study was rejected.
The regression coefficient for earnings management
variable is -5.87. This means that every increase in one unit
V. DISCUSSION
of earnings management variables, assuming the variable
profitability and firm size are fixed or constant, then the
The testing of the hypothesis in this study was
possibility of companies submitting annual financial
conducted to determine whether earnings management is
statements on time will decrease by 5.87. proxied by Discretionary Accruals, profitability that is
proxied by Return on Assets (ROA), and firm size that is
The regression coefficient for the profitability
proxied by Ln Total Assets as an independent variable
variable is 12,542. This means that every increase in 1 unit affecting timeliness audited financial statements as the
of profitability variable, assuming the earning management dependent variable. This research was conducted on trade,
variable and firm size are fixed or constant, then the
service and investment companies listed on the Indonesia
possibility of the company submitting annual financial
Stock Exchange (IDX) during the period 2015-2017. All
statements on time will increase by 12,542. tests needed in this study have been carried out, so
conclusions can be drawn on the results that have been
Regression coefficient value for firm size variable is
obtained.
0.035. This means that every increase in 1 firm size
variable unit, assuming the earnings management variable A. Effect of Earning Management on the Audited
and profitability is fixed or constant, then the possibility of Financial Statement Timeliness
the company submitting annual financial statements on The first hypothesis is earning management has a
time will increase by 0.035. negative effect on timeliness financial audited statements.
The test partially shows the results that earnings
The test results partially show that the earning
management variables proxied by Discretionary Accruals
management variable has a B value of -5.87 with a have a coefficient of -5,681. The coefficient value is
significance value of 0.013, where the significance value is negative, which means that the influence given by the
smaller than 0.05 (0.013 <0.05). It can be interpreted that independent variable on the independent variable is
earnings management has a significant negative effect on
negative. In addition, the results of hypothesis testing show
audited financial statement timeliness. This shows that H1
a significance value of 0.018. The significance value is
research was accepted.

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ISSN No:-2456-2165
smaller than 0.05, which means that the influence of the 0.026. The significance value is smaller than 0.05, which
independent variable on the dependent variable is means that the influence of the independent variable on the
significant. It can be concluded that earnings management dependent variable is significant. It can be concluded that
has a significant negative effect on timeliness audited profitability has a significant positive effect on timeliness
financial statements, so the first hypothesis (H1) of this audited financial statements, then the second hypothesis
research is accepted. The practice of earnings management (H2) of this research is accepted. The high profitability of a
increases the company's delay in submitting annual company increases the company's timeliness in submitting
financial reports. Companies that conduct earnings annual financial reports. The high profitability of the
management on their financial statements need time to company shows the good condition of the company.
intervene in financial statements. So, companies that Companies with good financial conditions do not have
conduct earnings management will need more time in things that are hidden from the public. Therefore, the
completing the preparation of financial statements. This delivery of company financial statements is not hampered
can cause companies to be late in submitting annual because companies tend not to delay the delivery of good
financial reports. This study’s result are in accordance with news to the public. Thus, the submission of annual
the results of previous studies conducted by Seni and financial reports can be carried out in a timely manner.
Mertha (2015). However, this study’s result contradict the This study’s result are in accordance with the results of
results of previous studies conducted by Noviansyah previous studies conducted by Hung and Phuong (2018),
(2016). Pradipta and Suryono (2017), Gulec (2017), and Marathani
(2013). However, this study’s result contradict the results
B. Effect of Profitability on the Audited Financial of previous studies conducted by Sufiyati (2017), Riswan
Statement Timeliness and Saputri (2015), and Mardyana (2013).
The second hypothesis is profitability has a positive
effect on audited financial statement timeliness. The partial C. Effect of Firm Size on the Audited Financial Statement
test shows the results that the profitability variable that is Timeliness
proxied by Return on Assets (ROA) has a coefficient of The third hypothesis is that firm size has a positive
11,417. The coefficient value is positive, which means that effect on audited financial statement timeliness. Partial
the influence given by the independent variable on the testing shows that firm size variables that are proxied by
independent variable is positive. In addition, the results of Ln Total Assets have a coefficient of 0.035. The
hypothesis testing show a significance value of 0.026. The coefficient value is positive, which means that the
significance value is smaller than 0.05, which means that influence given by the independent variable on the
the influence of the independent variable on the dependent independent variable is positive. In addition, the results of
variable is significant. It can be concluded that profitability hypothesis testing show that the significance value is
has a significant positive effect on timeliness audited 0.776. The significance value is greater than 0.05, which
financial statements, then the second hypothesis (H2) of means that the influence of the independent variable on the
this research is accepted. The high profitability of a dependent variable is not significant. It can be concluded
company increases the company's timeliness in submitting that the firm size does not significantly influence
annual financial reports. The high profitability of the timeliness audited financial statements, so the third
company shows the good condition of the company. hypothesis (H3) of this study is rejected. The size of the
Companies with good financial conditions do not have firm does not increase the timeliness of the company in
things that are hidden from the public. Therefore, the delivering annual financial statements significantly. Large
delivery of company financial statements is not hampered size companies do not necessarily deliver their annual
because companies tend not to delay the delivery of good financial reports in a timely manner because large
news to the public. Thus, the submission of annual companies have more and more complex information that
financial reports can be carried out in a timely manner. must be included in financial statements. Small companies
This study’s result are in accordance with the results of are not necessarily late in delivering their financial
previous studies conducted by Hung and Phuong (2018), statements because information that must be processed into
Pradipta and Suryono (2017), Gulec (2017), and Marathani financial statements is relatively simple. Although the firm
(2013). However, this study’s result contradict the results size does not significantly influence the audited financial
of previous studies conducted by Sufiyati (2017), Riswan statement, the direction of the hypothesis testing is in
and Saputri (2015), and Mardyana (2013). accordance with the hypothesis that has been formulated.
The size of the firm size increases the timeliness of
The second hypothesis is profitability has a positive submitting annual financial statements, but the effect is not
effect on audited financial statement timeliness. The partial significant. This study’s result are in accordance with the
test shows the results that the profitability variable that is results of previous studies conducted by Riswan and
proxied by Return on Assets (ROA) has a coefficient of Saputri (2015). However, this study’s result contradict the
11,417. The coefficient value is positive, which means that results of previous studies conducted by Sufiyati (2017),
the influence given by the independent variable on the Pradipta and Suryono (2017), Gulec (2017), and Marathani
independent variable is positive. In addition, the results of (2013).
hypothesis testing show that the significance value is

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ISSN No:-2456-2165
VI. CONCLUSION Based on the limitations contained in this study, the
suggestions that can be given for further research include:
Based on the results of tests that have been 1. Researchers can then use other independent variables
conducted, only earnings management and profitability that are more appropriate and can better reflect the
variables have a significant effect on the audited financial independent variables more accurately.
statement of timeliness in trading, service and investment 2. Researchers can further expand the research period, so
companies listed on the Indonesia Stock Exchange during that the research carried out is not only limited to 3
2015-2017. While the firm size variable does not years
significantly influence the audited financial statement 3. Researchers who can then expand the sector of the
timeliness. company under study, so that they can expand the
research sample so that the results of the study describe
Earning management variables that are proxied by the condition of the industry as a whole and can be
Discretionary Accruals have a significant negative effect applied in general
because companies that conduct earnings management on 4. Researchers can then add independent variables that
their financial statements need time to intervene in have not been used in this study to look at other factors
financial statements, so companies will need longer time to that can affect audited financial statements timeliness.
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