<![CDATA[This study aims to prove whether institutional ownership can reduce the impact of earningsmanagement practices on firm value. Earnings management is proxied by accrual management, realactivity manipulations based on abnormal production costs and abnormal discretionary expenses.Meanwhile, firm value is proxied by the metrics developed by Rhodes-Kropf et al (2005) which havethe advantage of detecting misvaluation. The sample is manufacturing companies on the IndonesiaStock Exchange which have institutional ownership. The research period for 2010-2018 with paneldata 410 samples observation. The findings show that institutional ownership can mitigate the effect ofearnings management on firm value. Surprisingly, finding is that real activity manipulations based onabnormal discretionary expenses have the potential to destroy firm value. In other words, the market ispenalizing the value of the company. These results contribute to the insight that the importance of therole of institutional ownership is to reduce information asymmetry in preventing the destruction offirm value. Furthermore, this finding is a supplement for investors, regulators and researchers inestimating the value relevance and improving the quality of accounting numbers in the context of firmvalue.]]>
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