The aim of this study was to examine the moderating effect of good corporate governance (CG) on the relationship between accrual earnings management (AEM) and real earnings management (REM) and firm value (FV). The current approach employed the discretionary accruals model, which relied on companies’ data listed on the Jakarta Islamic Index. The study results suggest that the incorporation of discretionary accruals in the calculation of AEM did not yield a statistically significant effect on the FV. The adverse effects of REM on FV are significant when considering the discretionary cash flow operations, discretionary production, and discretionary expense. The objective of this study is to analyze the influence of CG on the association between earnings management (EM) and FV. The present study aims to examine the moderating influence of institutional ownership, independent commissioners, audit committees, and the board of directors on the impact of AEM and REM on FV. The results indicate that the influence of CG on the relationship between AEM and REM, as mediated by discretionary cash flow operations, is not significant in terms of FV. However, CG does have a moderating effect on the relationship between REM and FV, specifically through discretionary production and discretionary expense.

Keywords: corporate governance, accrual earnings management, real earnings management, FV