The Effect of Earnings Management in Mediating the Role of Corporate Governance, Capital Structure, and Liquidity on Financial Performance (A Study of Conventional Commercial Banks Listed on the Indonesia Stock Exchange)
Keywords:
Corporate Governance, Capital Structure, Earnings, Management, Financial Performance Liquidity.Abstract
This study examines the effect of corporate governance, capital structure, and liquidity on financial performance, with
earnings management as a mediating variable in conventional commercial banks listed on the Bursa Efek Indonesia
during 2021–2025. A quantitative approach was applied using secondary data from annual financial reports of banks
consistently listed throughout the observation period. Purposive sampling was used to obtain a balanced panel dataset
covering five years. Data were analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM) to
assess both the measurement and structural models. The results show that corporate governance, capital structure, and
liquidity have positive and significant effects on earnings management. In addition, corporate governance, capital
structure, liquidity, and earnings management each have a positive and significant direct effect on financial
performance. Mediation analysis confirms that earnings management significantly mediates the relationship between
corporate governance, capital structure, liquidity, and financial performance. The R-square values indicate strong
explanatory power in predicting earnings management and financial performance. These findings suggest that effective
governance mechanisms, optimal capital structure decisions, and adequate liquidity management improve financial
performance both directly and indirectly through earnings management. This study provides empirical evidence on the
mediating role of earnings management in the Indonesian banking sector and offers practical implications for bank
management, investors, and regulators in enhancing governance and financial strategies to ensure sustainable
performance
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This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
