This study examine the relationship between discretionary accrual and future profitability and the effect of discretionary accrual based on size’s firm, audit quality, and Industry sector in the Indonesia Business Group. Data for discretionary accrual, size’s firm, audit quality, and Industry sector were collected from all listed firms in Indonesia Stock Exchange (IDX) from 2004-2007. The sample of this study is all business groups in Indonesia. Regression analysis techniques used to examine the factors of earnings management in the business group company in Indonesia. The results are there is a relationship between discretionary accruals and future profitability; and the effect of discretionary accruals on future profitability is weaker for firm with greater firm size, and for firms audited by non big 4 auditors. The results also show that the effect of discretionary accruals on future profitability is stronger for financial sector firm than manufacture sector firm.

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