1074 

 FACTORS AFFECTING THE QUALITY OF EARNINGS (EMPIRICAL 
STUDY OF TRANSPORTATION SUB-SECTOR COMPANIES 
LISTED ON THE INDONESIA STOCK EXCHANGE IN 2018-2020) 

Volume: 4 
Number: 4 
Page: 1074 - 1081 

Minanari MINANARI1, Rina Yuliastuty ASMARA2 
1,2Faculty of Economics and Business, University of Mercu Buana, Jakarta, 
Indonesia 

Corresponding Author: Minanari MINANARI 
E-mail: minanari@mercubuana.ac.id 

Article History: 
Received: 2023-06-10 
Revised: 2023-06-17 
Accepted: 2023-07-16 
 

Abstract:  

The main requirement needed by investors in the capital market is financial report 
information for making investment decisions. Financial reports are one of the 
tools used by management to show company performance. Through financial 
reports, potential investors also see the condition of the company. One item that 
must be considered is the company's profit. Quality profit is important 
information for potential investors to make the right decision. This study aims to 
examine the effect of Tax Planning, Corporate Social Responsibility (CSR), 
Company Size and Leverage on Profit Quality (Empirical Study of Transportation 
Companies Listed on the Indonesia Stock Exchange in 2018 - 2020). The object of 
this study uses transportation companies listed on the Indonesia Stock Exchange 
(IDX) for 2018 - 2020. The sample of this research is 10 out of 46 companies that 
meet the criteria. The sampling technique used in this research is purposive 
sampling method. The data analysis technique used is multiple linear analysis 
consisting of two variables, namely the dependent variable and the independent 
variable. The results of this study indicate that (1) tax planning has a negative and 
insignificant effect on earnings quality, (2) corporate social responsibility (CSR) 
has a negative and significant effect on earnings quality, (3) company size has a 
negative and significant effect on earnings quality , (4) Leverage has a negative 
and insignificant effect on earnings quality. 

Keywords: Earning Quality, Tax Planning, Corporate Social Responsibility 
(CSR), Company Size, Leverage.  

 

 

 

Cite this as: MINANARI., ASMARA, R.Y. (2023). “Factors Affecting the Quality 
of Earnings (Empirical Study of Transportation Sub-Sector Companies Listed on 
the Indonesia Stock Exchange in 2018-2020)” International Journal of 
Environmental, Sustainability, and Social Science, 4 (4), 1074 - 1081. 

 
INTRODUCTION  

The main need required by investors in the capital market is financial report information for 
making decisions involving capital. Financial statements are one of the tools management uses to 
show company performance. Quality profit is important information for potential investors to make 
the right decision. 

Earnings quality can be low if the earnings presented do not reflect the actual condition of the 
company. Hence, the information obtained from the earnings reports is biased, and the impact is 
misleading for investors and creditors in predicting future earnings with their decision-making 
(Marpaung, 2019). According to Sulistyanto (2018: 215) in this study, the Quality of earnings can be 
measured by Discretionary Accrual, which is the calculation of the Jones Model (1991) to show the 
Quality of earnings by taking into account income as an accrual policy so that it is considered better 
in measuring the Quality of a company's earnings. 

 
Table 1. Value of Discretionary Accrual 

Issuer 2018 2019 2020 

mailto:minanari@mercubuana.ac.id


 

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GIAA 0.058 0.061 0.110 
SMDR 0.143 0.181 0.292 

BLTA 0.143 0.145 0.183 

Source: Author Processed Data 

 
Based on the analysis measured by Discretionary Accrual, several companies, such as Garuda 

Indonesia, Samudera Indonesia, and Berlian Laju Tanker, have a symptom of increased accrual 
recognition in 2018 compared to the previous year, so it can be judged that the Quality of earnings 
is less than optimal because the company received the cash received for In that period, not all of 
them. 

With the descriptions of the cases of several companies in the transportation sub-sector, it can 
be concluded that significant profits can be affected by a large amount of abnormal revenue 
recognition. Moreover, in this case, it can allow for opportunities to indicate earnings management 
to produce quality earnings information that can influence investment decision-making for 
investors. With this in mind, researchers want to study the effect of tax planning, corporate social 
responsibility, company size, and leverage on earnings quality by using discretionary accrual 
measurements. 
 
METHODS 

Population and Research Sample. The population in this study were transportation sub-
sector companies listed on the Indonesia Stock Exchange (IDX) in 2018-2020, namely 46 companies. 
However, after being selected using the purposive sampling method based on predetermined 
criteria, ten companies were obtained as a sample in this study. Observations in this study were 
carried out for the 2018-2020 period, so the number of samples in this study was 40 data. 
 

Table 2. Operational Measurement of Research Variables 
Variable Indicator Measurement Scale 

Bound (Y) 
Profit Quality 

𝐷𝐴𝐶 =  𝑇𝐴𝐶it  –  𝑁𝐷𝐴𝐶it 
(Model Jones, 1991) 

Ratio 

Free (X1) 
Tax Planning 

Tax Retention Rate (TRRit) = 
Net Incomeit

Pretax Income EBITit
 

(Subramanyam, 2017:221) 

Ratio 

Free (X2) 
Corporate Social Responsibility 

CSRIy = 
ΣXky 

𝑁𝑦
 

(www.globalreporting.org) 

Ratio 

Free (X3) 
Company Size 

Company SizeSize = 𝐿ogaritma Natural of 
total assets 
(Hery, 2017:11) 

Ratio 

Free (X4) 
leverage 

𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 = 
 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
 

(Kasmir, 2018:112) 

Ratio 

 
RESULT AND DISCUSSION 

The population in this study were transportation sub-sector companies listed on the Indonesia 
Stock Exchange (IDX) in 2018-2020, namely 46 companies. However, after being selected using the 
purposive sampling method based on predetermined criteria, ten companies were obtained as a 
sample in this study. Observations in this study were carried out for the 2018-2020 period, so the 
number of samples in this study was 40 data. 

 
Table 3. Descriptive Statistics 

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 N Minimum Maximum Mean Std. Deviation 

DAC 40 .0198 .8337 .110625 .1441341 
PP 40 .5887 8.6024 1.105508 1.2596023 
CSR 40 .0260 .5844 .258440 .1272383 
UP 40 24.9208 29.9032 28.413823 1.3269946 
LV 40 .0023 5.9803 1.213060 1.2034061 
Valid N 
(listwise) 

40     

Source: Data obtained with SPSS 20 
 

Classic assumption test, Normality test. The normality test aims to test whether, in the 
regression model, the confounding or residual variables have a normal distribution (Ghozali, 2018, 
p. 27). Decision-making regarding normality is as follows: 

a. If Asymp. Sig. < 0.05, then the data distribution is not normal. 
b. If Asymp. Sig. > 0.05, then the data distribution is normal 

 

Table 4. Normality Test 

  Unstandardized Residual 

N  40 
Normal 
Parameters. b 

Mean 0E-7 

 Std. Deviation 10576465 
Most Extreme Absolute 192 
Differences Positive 192 
 Negative 118 
Kolmogorov-
Smirnov 

 1.212 

Asymp.Sig. 
(2-tailed) 

 106 

Source: Data obtained with SPSS 20 

 

Based on Table 4, the P value (Asymp. Sig) 0.106 > 0.05, it can be concluded that the residual 
data in the regression model is normally distributed. 

 
Table 5. Multicollinearity Test 

Model 

Unstandardized 
Coefficients  

Standardized 
Coefficients 

t Sig. 

Colinearity 
Statistics 

B Std. 
Error 

Beta Tolerance VIF 

1 

(Constant) 1.463 .436  3.356 .002   
PP -.001 .014 -.012 -.098 .922 .981 1.020 
1 CSR -.397 .184 -.351 -2.159 .038 .583 1.714 
UP -.044 .016 -.403 -2.723 .010 .703 1.422 
LV -.005 .017 -.039 -.274 .786 .754 1.327 

Source: Data obtained with SPSS 20 

 
Table 6. Heteroscedasticity Test 

Model 

Unstandardized 
Coefficients 

Standardized 
Coefficients t Sig. 

B Std. Error Beta 



 

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1 

(Constant) -3.533 6.327  -.558 .580 
PP .043 .028 .318 1.502 .142 
1 CSR -.013 .127 -.030 -.105 .917 
UP 1.158 1.884 .188 .615 .543 
LV -.035 .068 -.189 -.513 .611 

Source: Data obtained with SPSS 20 
 

Based on Table 6, the significance value of the four independent variables is more than 0.05. 
Thus it can be concluded that there is no heteroscedasticity in the regression model. 

Autocorrelation Test. The autocorrelation test aims to test whether, in the linear regression 
model, there is a correlation between the confounding errors in the -t period and the errors in the t-
1 (previous) period. This study used the autocorrelation test using the Durbin-Watson test (Ghozali, 
2018: 112). 

 
Table 7. Autocorrelation Test Results 

Model R R Square 
Adjusted R 

Square 
Std. The error 

in the Estimate 
Durbin-Waston 

1 .679a .462 .400 .1116449 1.880 
Source: Data obtained with SPSS 20 

 
From the results of this analysis, it can be seen that the Durbin-Watson value of the 

autocorrelation test is 1.1880. While the size size of the DW-table with a total sample of 40 (N = 40) 
and the number of independent variables 4 (K = 4), then the number dl (lower limit) is 1.2848 and 
du (upper limit) is 1.7209. Because 1.7209<1.880< (4-1.7209) or du<dw<(4-du), it can be concluded 
b that there is no positive or negative autocorrelation. 

 
Table 8. Coefficient Test 

Model R R Square 
Adjusted R 

Square 
Std. The error in the 

Estimate 

1 .679a .462 .400 .1116449 
Source: Data obtained with SPSS 20 

 
Based on Table 6, it can be seen that the value of Adjusted R Square (R2) is 0.400 or 40%. This 

shows that the Quality of earnings, as measured by 40% discretionary accruals, can be explained 
by variations influenced by the variables PP, CSR, UP, and LV. At the same time, the remaining 
60% (100% - 40%) is influenced by other factors outside the model or variables studied. 
 

Table 9. Statistical Test F 

Model 
Sum of 
Squares 

df 
Mean Square 

F Sig. 

1 
Regression .374 4 .093 7.500 .000 
Residual .436 35 .012   
Total .810 39    

Source: Data obtained with SPSS 20 

 
Based on Table 9, the F test results have a significance value of 0.000, which means less than 

0.05, meaning that the variables PP, CSR, UP, and LV are feasible to test the effect on Discretionary 
Accruals. 



 

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Individual Parameter Significance Test (Statistical Test t). The t-statistical test shows how 
far the influence of one explanatory or independent variation individually explains the variation of 
the dependent variable and is used to determine whether or not the influence of each independent 
variable individually on the dependent variable is tested at a significance level of 0.05 (Ghozali, 2018, 
p. 98). The results of the t-test are as follows: 
 

Table 10. Individual Parameter Significance Test Results (t-test) 

Model 

Unstandardized 
Coefficients 

Standardized 
Coefficients t Sig. 

B Std. Error Beta 

1 

(Constant) 1.460 .435  3.357 .002 
PP -.001 .014 -.012 -.098 .958 
1 CSR -.397 .184 -.351 -2.159 .039 
UP -.044 .016 -.403 -2.723 .010 
LV -.005 .017 -.039 -.274 .778 

Source: Data obtained with SPSS 20 

 
Tax planning has a calculated t value of -0.098 with a significance level of 0.958, meaning it 

is greater than 0.05. This shows that tax planning does not significantly affect earnings quality, so 
H1 is rejected. Corporate Social Responsibility (CSR) has a t value of -2.159 with a significance level 
of 0.039, meaning it is less than 0.05. This shows that Corporate Social Responsibility (CSR) 
significantly influences earnings quality, so H2 is accepted. 

Company size has a calculated t-value of -2,723 with a significance level of 0.010, which 
means it is greater than 0.05. This shows that firm Size significantly affects earnings quality, so H3 
is accepted. Leverage has a calculated t value of -0.274 with a significance level of 0.778, meaning 
it is greater than 0.05. This shows that Leverage has no significant effect on Quality. 

 
Table 11. Results of Multiple Linear Regression Analysis 

Model 

Unstandardized 
Coefficients 

Standardized Coefficients 

B Std. Error Beta 

1 

(Constant) 1.460 .435  
PP -.001 .014 -.012 
1 CSR -.397 .184 -.351 
UP -.044 .016 -.403 
LV -.005 .017 -.039 

Source: Data obtained with SPSS 20 

 

The regression equation in this study is DAC = 1.463-0.001 PP-0.397CSR-0.044UP -0.005LV + 
ε. From the results of the regression, it can be concluded that: 

a. A constant of 1,463 states that if the independent variables, namely Tax Planning, Corporate 
Social Responsibility (CSR), Company Size, and Leverage, are worth 0, then the dependent 
variable, Profit Quality, is worth 1,463. 

b. The tax planning regression coefficient is -0.001. This shows that if tax planning increases 
by one, then the Quality of earnings will decrease by 0.001 from the previous value, which 
indicates that the disclosure of tax planning will reduce discretionary accruals. 

c. The corporate social responsibility regression coefficient is -0.397. This shows that if CSR 
increases by one, the Quality of earnings will decrease by 0.397 from the previous value, 



 

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which indicates that the disclosure of corporate social responsibility will reduce 
discretionary accruals. 

d. The regression coefficient of firm Size is -0.044. This shows that if the SizeSize of the 
company increases by one, then the Quality of the kaba will decrease by 0.044 from the 
previous value, which indicates that disclosure of company size will reduce Discretionary 
Accruals. 

e. The leverage regression coefficient is -0.005. This shows that if the leverage increases by 
one, then the Quality of the kaba will decrease by 0.005 from the previous value, which 
indicates that the disclosure of Leverage will reduce Discretionary Accruals. 

The Effect of Tax Planning on Profit Quality. The test results that have been carried out in 
this study indicate that tax planning has a negative and insignificant effect on earnings quality. 
Because this tax planning activity is more stringent in the applicable tax regulations, company 
management cannot pay taxes efficiently, affecting the costs incurred to distribute dividends or 
return profits for company owners. As well as, company management that carries out tax planning 
cannot guarantee the practice of earnings management because of the period for changes in tax rates, 
which creates a lack of preparation and maturity of companies in carrying out tax planning. So that 
tax planning does not significantly affect the Quality of the profits generated. 

It is also supported by other studies, such as Widiatmoko & Mayangsari (2016), who have 
conducted research which results in tax planning having an insignificant effect on earnings quality 
because, in the case of corporate taxpayer tax regulations that are more stringent, it will affect tax 
planning made by company management. Less effective and efficient to minimize taxes in order to 
increase profits. So tax planning is not significantly influencing the Quality of the profits generated. 

The Effect of Corporate Social Responsibility on Profit Quality. The test results that have 
been carried out in this study indicate that Corporate Social Responsibility (CSR) has a negative and 
significant effect on earnings quality. By disclosing social responsibility information in the annual 
report aims to provide transparent information regarding the business carried out by the company, 
the company's management can establish long-term relationships with stakeholders to provide a 
positive image related to the condition of the company, and CSR is a mandatory disclosure for 
companies that go public in Indonesia. In addition, a company that discloses high CSR will affect 
the low value of Discretionary Accruals, which means it can increase the Quality of earnings. So, in 
this case, companies that express social responsibility well then increase the Quality of earnings 
which can be seen from the Discretionary Accrual value. Supported by research according to Bagus 
& Djaddang (2018) reveals that CSR has an effect and is significant on earnings quality. The 
company's activities carried out to maximize profits need to be reviewed. With a company that is 
oriented toward maximizing profit, it will show success in the short term. However, in the long 
term, it will distort financial information for the company due to complaints from the public and 
other stakeholders. This means that disclosure of CSR in good financial reports will significantly 
affect earnings quality. 

The Influence of Company Size on Profit Quality. The test results that have been carried out 
in this study indicate that company size has a negative and significant effect on earnings quality. 
Companies with large total assets will have good prospects for a relatively long period and are more 
stable in disclosing profits. In addition, management strives to disclose all information transparently 
so as not to take the opportunistic actions required to present financial reports to investors. Thus 
large companies report conditions more accurately and can affect the value of adequate accruals as 
quality earnings. The results of this study are supported by Arisonda (2018) that company size has 
a significant and significant effect on earnings quality. The company's size is related to the Quality 



 

1080 

of earnings because the larger the size of a company, the level of business continuity and 
transparency. The company is also highly improving financial performance, affecting the Quality of 
profits. 

Effect of Leverage on Earnings Quality. The test results that have been carried out in this 
study indicate that Leverage has a negative but not significant effect on earnings quality. This 
happens allegedly because when company management uses financing sources for company 
expansion or investment in assets, which can be seen from the ratio of fixed assets to total assets 
contained in each company on average having above 50%, the results cannot increase information 
company performance. So the amount of debt used does not significantly affect the Quality of 
earnings in a company. The results of this study are supported by Graha & Khairunnisa (2018), 
which reveal that Leverage has an insignificant effect on earnings quality. Leverage describes the 
source of operational funds used to improve company performance. However, this shows that the 
source of funds the company uses is not used properly, so it affects uncontrolled financial stability. 
So this source of funding cannot contribute to profits. So the amount of debt obtained has no 
significant influence in determining the Quality of good earnings in a company. 

 
CONCLUSION 
 The tests carried out in this study show that tax planning has a negative and insignificant 
effect on earnings quality. Second, Corporate Social Responsibility (CSR) negatively impacts 
earnings quality. Third, Firm Size has a negative and significant effect on Earnings Quality. Fourth, 
Leverage has a negative and insignificant effect on Earnings Quality. 

Researchers can suggest expanding the research object by adding core variables other than the 
variables used so that the results can be more perfectly defined, adding years of observation samples 
by selecting samples representative in explaining earnings quality, and expanding the research 
object. By adding a research sample. 
 
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