ABSTRACT

This study was conductedto analyze the correlation between the application of the principles of corporate governance (fairness, transparency, accountability, andresponsibility) with earnings management in companies listed on Indonesia Stock Exchange in 2011-2012 and gives an overviewof how the implementation of corporate governanceini can reduce management actions profits made by the company manager. This study used secondary data from publicly traded companies nonlembagakeuangan ever survey of corporate governance followed PerceptionIndex 2009 to 2012 conducted by The Indonesian Institute for Corporate Governance (IICG). Test carried out using correlation test. Test conducted for 2011-2012 and combined in 2011 and 2012. Wherewith Test result show that in general, the application of the principles of governance good corporate not guarantee the absence of earnings management yangdilakukan by the company.

Keywords: agency theory, earnings management, corporate governance, corporate non-financial institutions, and correlation test