The question regarding the role of independent directors in corporate governance in general and in limiting real earnings management practices in particular has long been debated. This study, therefore, attempts to address this question by investigating the influence of independent directors on real earnings management (REM) from the perspective of Indonesian two-tier board system. Examining the data of manufacturing firms listed on the Indonesia Stock Exchange during the 2014- 2018 period and employing the model developed by Roychowdhury (2006) to measure REM, the findings of this study indicate that independent directors positively affect REM practices, suggesting the under-performance of independent directors which may put minority shareholders at a disadvantage. The insight provided by these findings may be of important value to regulators and policy makers, especially in formulating future policies with regard to the role of independent directors in the two-tier board system adopted in Indonesia in order to improve good corporate governance.
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