Real Earnings Management and Annual Report Readability with Institutional Ownership Moderation

Harry Harsono (Universitas Tarumanegara)
Ignatius Roni Setyawan (Universitas Tarumanegara)
Estralita Trisnawati (Universitas Tarumanegara)

EKOMBIS REVIEW: Jurnal Ilmiah Ekonomi dan Bisnis
Vol 14 No 3 (2026): Juli

This study examines the effect of real earnings management on the readability of annual reports of infrastructure companies listed on the Indonesia Stock Exchange for the 2021–2023 period, with institutional ownership as a moderating variable. Readability is measured using the Python-based Gunning Fog Index and analyzed with EViews. The results show that manipulation of operating cash flow (REM_CFO) and production (REM_PROD) has no significant effect on readability, while manipulation of discretionary expenses (REM_DIS) has a positive and significant effect. Institutional ownership is able to weaken the negative effect of REM_DIS on readability, demonstrating the effectiveness of institutional investor oversight in improving reporting transparency. These findings emphasize the importance of governance in maintaining the quality of corporate disclosure.