Financial Reporting Integrity In Infrastructure Development: Implications For Sustainable Tourism And Community Empowerment

Abstrak

This study investigates the influence of tax planning, deferred tax assets, and profitability on earnings management in infrastructure sector companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2023. As a sector that plays a vital role in supporting sustainable tourism and community empowerment through the development of basic infrastructure—such as transportation, utilities, and public facilities—the integrity of financial reporting in this sector holds strategic importance. Ensuring transparency in financial practices is essential for aligning infrastructure development with national economic recovery and achieving the Sustainable Development Goals (SDGs). Using a purposive sampling method, 42 companies were selected from an initial sample of 70 after removing outliers. The data were analyzed using multiple linear regression. The results show that only deferred tax assets have a statistically significant and positive effect on earnings management, suggesting the potential use of future tax benefits to manipulate reported profits. In contrast, tax planning and profitability were found to have no significant effect. Simultaneously, the three variables did not significantly influence earnings management, as indicated by a p-value above 0.05. The Adjusted R² value of 0.040 suggests that the model explains only 4% of the variation in earnings management, highlighting other influencing factors such as corporate governance, audit quality, or regulatory compliance. These findings underline the critical need for financial reporting integrity in infrastructure investments, particularly in regions where tourism is a key driver of inclusive development. Transparency and accountability are essential to maintain public trust and ensure that infrastructure development contributes to long-term sustainability and equitable community outcomes. Future research should explore additional variables to understand better the dynamics of earnings management and how financial practices in infrastructure firms can either support or hinder local contributions to global development goals