<![CDATA[Variations in corporate financial characteristics may correspond to differences in the extent of reporting discretion exercised by managers. This research investigates whether leverage, asset growth, capital intensity, operating cash flow ratio, profitability, and firm size help explain discretionary accrual activity among 72 firms from Indonesia's Basic Materials and Industrial sectors during 2019–2024. Reporting discretion is measured through the absolute value of discretionary accruals derived from the Modified Jones approach. Panel-data estimation is conducted following formal specification testing, which indicates that the Random Effects model is the most appropriate baseline estimator. The results show that firms experiencing stronger asset expansion and higher operating cash flow ratios tend to display greater discretionary accrual activity. In contrast, larger firms and those with greater concentrations of fixed assets are associated with lower reporting discretion in the baseline model, although these relationships become less robust under alternative specifications. Debt intensity and profitability do not appear to explain variation in discretionary accrual behavior. Additional robustness estimation using a Fixed Effects specification with Driscoll–Kraay standard errors produces a broadly similar pattern of results. Overall, operational and growth-related conditions are more strongly associated with managerial reporting discretion than financing structure within the sampled firms.]]>
