THE INFLUENCE OF EARNINGS MANAGEMENT ON THE COST OF DEBT (AN EMPIRICAL STUDY ON LISTED CONSUMER GOODS COMPANIES IN INDONESIA STOCK EXCHANGE)

The problem in this research is whether earnings management has influence on cost of debt. This research is aimed to find out the empirical evidence of the influence of earnings management on the cost of debt on consumer goods companies listed in Indonesian Stock Exchange (IDX) in year 2012.The population in this research are all consumer goods companies listed in Indonesia Stock Exchange in 2012. From 36 listed companies, 35 companies were selected as the samples. Judgment sampling is used as a method of sample selection. The data used in this research is secondary data, by collecting and downloading the financial statements from Indonesian Stock Exchange site http://www.idx.co.id. Data analysis technique used was simple regression. The results obtained with significance level α = 5%, indicates that earnings management has no effect on the cost of debt. In this research the hypothesis testing of the second and third are ignored because it moderates first hypothesis. The second and third hypotheses as moderating will not strengthen or weaken the relationship between earnings management and the cost of debt, because of the remaining first hypothesis showed no influence between earnings management and cost of debt. The conclusion of the research hypothesis states that the first hypothesis is rejected. This means that earnings management has no influence on the cost of debt on consumer goods companies listed in Indonesian Stock Exchanges.