The Value Relevance of Earnings in the Presence of Earnings Management: Indonesia as Evidence

2021 ◽  
pp. 097215092110602
Author(s):  
Ratnaningrum Ratnaningrum ◽  
Rahmawati Rahmawati ◽  
Djuminah Djuminah ◽  
Ari Kuncara Widagdo
Keyword(s):  
Earnings Management ◽  
No Value ◽  
Value Relevance ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Earnings Response Coefficient ◽  
Panel Data Regression ◽  
Data Regression ◽  
Earnings Response ◽  
The Impact

This study examines the influence of earnings management on the value relevance of earnings, that is, the value relevance of level and changes of earnings. The sample consists of manufacturing companies listed on the Indonesia Stock Exchange (IDX), comprising 606 observations. By using panel data regression, this study provides evidence that the level of earnings has no value relevance; conversely, changes in earnings have value relevance, indicating that earnings have less value relevance. Furthermore, the results of the relevance test of earnings value with the presence of earnings management show that the relevance of the value of the earnings level increases with the presence of earnings management; on the contrary, the relevance of earnings changes decreases with the presence of earnings management. Based on the value of earnings response coefficient, the impact of earnings management on the value relevance of level and changes of earnings appears to indicate that earnings management reduces the value relevance of earnings.

PENGARUH EARNINGS MANAGEMENT TERHADAP EARNINGS QUALITY

2010 ◽  
Author(s):  
Pupun Tri Wahyuni ◽  
Resti Yulistia Muslim
Keyword(s):  
Earnings Management ◽  
Sampling Method ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Manufacturing Companies ◽  
Financial Report ◽  
Earnings Response Coefficient ◽  
Discretionary Accrual ◽  
Response Coefficient ◽  
Earnings Response

This research objective is to axamine empirically the influence of earnings management on earnings quality. The study motivated by the controversy of previous study about earnings management and earnings quality. Earnings management was measured by Discretionary Accrual and earnings quality was measured by Earnings Response Coefficient (ERC). The units were 128 (16x8) Quartal financial report in manufacturing companies listed in the Jakarta Stock Exchange, started from the year 2005 up to 2006. The data was collected using purposive sampling method. Statistical method used to test the hypotheses was multiple regressions. The result of the research showed that: the influence of earnings management on earnings quality was negative, sig 0.049. It means that the lower earnings management will be followed by higher earnings quality. This study supported the result of Fetham and Pae (2000), Nelson et al. (2000), Scott (2000), Lobo and Zhou (2001), also Teixeira (2002), Pudjiastuti (2006). 

scholarly journals Analysis of The Effect of Profitability and Liquidity on Income Management Which Impact on Company Value in Soe Banks Registered on Indonesia Stock Exchange Period 2009-2019

2021 ◽  
Vol 6 (3) ◽  
pp. 1297
Author(s):  
Masno Marjohan
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Stock Exchange ◽  
Return On Assets ◽  
Company Value ◽  
Panel Data Regression ◽  
Analysis Technique ◽  
Data Regression ◽  
Comprehensive Picture ◽  
The Impact

This study aims to analyze, test the effect of profitability as measured by Return On Assets, liquidity as measured by LDR on earnings management, and the impact of earnings management on firm value in state-owned tire companies listed on the Indonesia Stock Exchange from 2009 to 2019. Total population This research is 4 state-owned bank companies so that the entire population is sampled with a period of 10 years from 2009-2019. The analysis technique used in this research is panel data regression to obtain a comprehensive picture of the relationship between one variable and another. The results of the research partially show that ROA, LDR Profitability has no effect on Earning Management, Profitability and Liquidity simultaneously have an effect on Earnings Management, and show that earnings management affects Firm Value.

The impact of earnings management on the value relevance of earnings

2017 ◽  
Vol 32 (1) ◽  
pp. 50-74 ◽  
Author(s):  
Wael Mostafa
Keyword(s):  
Earnings Management ◽  
Value Relevance ◽  
Operating Performance ◽  
Accounting Earnings ◽  
Content Type ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Data Limitations ◽  
Earnings Response ◽  
The Impact

Purpose This paper aims to examine the association between earnings management and the value relevance of earnings (the latter is operationalized by earnings response coefficient). Specifically, this study examines whether opportunistic earnings management has a negative impact on the value relevance of earnings for a sample of firms listed on the Egyptian Stock Exchange. Design/methodology/approach Different from prior work and due to data limitations in the Egyptian market, this paper first examines for the existence of earnings management based on the whole operating performances of the firms by testing whether firms with low/poor operating performance are more likely to choose income-increasing actions (strategies) than firms with high operating performance. After confirming that low operating performance firms manage earnings upward, the authors then assess whether this opportunistic earnings management by these low operating performance firms reduces the value relevance of earnings. This is performed by estimating a model of the relationship between stock returns and accounting earnings with a dummy variable that allows parameter shifts for earnings of low operating performance firms. Findings The results show that discretionary accruals are positive and significantly higher for firms with low operating performance than those for firms with high operating performance. These results indicate that low operating performance firms increase the earnings management practices by probably increasing their reported earnings opportunistically to mask their low performance. Furthermore, the results show that the earnings response coefficient is significantly smaller for earnings of low operating performance firms than that for earnings of high operating performance firms. These results suggest that earnings of firms with low operating performance (that are engaged in opportunistic earnings management strategies) have less value relevance than earnings of firms with high operating performance, i.e. the informativeness of managed earnings is lower than that of non-managed earnings. Practical implications Based on these results, it is plausible that the presence of opportunistic earnings management adversely affects the value relevance of accounting earnings. Originality/value Consistent with previous results from developed countries, this study shows that earnings management is a significant factor that affects value relevance of earnings in Egypt.

scholarly journals PERAN KEPEMILIKAN INSTITUSIONAL DALAM HUBUNGAN MANAJEMEN LABA DAN NILAI PERUSAHAAN

2020 ◽  
Vol 4 (1) ◽  
pp. 42-64
Author(s):  
Agus Satrya Wibowo
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Management Practices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Production Costs ◽  
Manufacturing Companies ◽  
Real Activity ◽  
The Impact

This study aims to prove whether institutional ownership can reduce the impact of earnings management practices on firm value. Earnings management is proxied by accrual management, real activity manipulations based on abnormal production costs and abnormal discretionary expenses. Meanwhile, firm value is proxied by the metrics developed by Rhodes-Kropf et al (2005) which have the advantage of detecting misvaluation. The sample is manufacturing companies on the Indonesia Stock Exchange which have institutional ownership. The research period for 2010-2018 with panel data 410 samples observation. The findings show that institutional ownership can mitigate the effect of earnings management on firm value. Surprisingly, finding is that real activity manipulations based on abnormal discretionary expenses have the potential to destroy firm value. In other words, the market is penalizing the value of the company. These results contribute to the insight that the importance of the role of institutional ownership is to reduce information asymmetry in preventing the destruction of firm value. Furthermore, this finding is a supplement for investors, regulators and researchers in estimating the value relevance and improving the quality of accounting numbers in the context of firm value.

scholarly journals Pengaruh Keahlian Akuntansi Komite Audit Dan Dewan Komisaris Wanita Terhadap Manajemen Laba

2019 ◽  
Vol 1 (3) ◽  
pp. 1051-1067
Author(s):  
Nita Gusda Putri ◽  
Erinos NR
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Sampling Method ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Analysis Method ◽  
Panel Data Regression ◽  
Data Regression ◽  
Accounting Expertise ◽  
Positive Effect

This study aims to determine and analyze the influence of the audit committee’s accounting expertise and the female board of commissioners on earnings management in manufacturing companies listed on the Indonesia Stock Exchange for the period 2015-2017 both simultaneously and partially. Data analysis method used is panel data regression analysis. Using a purposive sampling method to obtain a sample of 63 companies from 121 manufacturing companies. Based on the results of the study it is known that the accounting expertise of the audit committee and female board of commissioners simultaneously influence earnings management. But partially, the audit committee accounting expertise has a positive effect on earnings management and the female board of commissioners has a positive effect on earnings management in manufacturing companies listed on the Indonesia Stock Exchange for the period 2015-2017.

scholarly journals The impact of leverage on the earning response coefficients

2020 ◽  
Vol 9 (4) ◽  
pp. 277-285
Author(s):  
Aulia Puspita Dewi ◽  
Sutrisno T. Sutrisno ◽  
Lilik Purwanti
Keyword(s):  
Corporate Governance ◽  
Empirical Evidence ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Earnings Response Coefficients ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Analysis Technique ◽  
Earnings Response ◽  
The Impact

This study aims to examine whether there is an influence of leverage on earnings response coefficients with corporate governance as moderation. This study uses 108 data of manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the year of observation 2016 to 2018. The analysis technique used in this study is a moderated regression analysis using SPSS version 24. The results of this study provide empirical evidence that leverage has an effect but not significant on the earnings response coefficient. This study also provides empirical evidence that corporate governance is unable to strengthen or weaken the effect of leverage on the earnings response coefficient.

scholarly journals An investigation of the value relevance of deferred tax: the mediating effect of earnings management

2020 ◽  
Vol 17 (1) ◽  
pp. 317-328
Author(s):  
Walid Shehata Mohamed Kasim Soliman ◽  
Karim Mansour Ali
Keyword(s):  
Earnings Management ◽  
No Value ◽  
Management Practices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Mediating Effect ◽  
Listed Firms ◽  
Deferred Tax ◽  
The Impact ◽  
Egyptian Stock Exchange

There is an academic discussion about the value relevance of deferred tax, which aims to find out the effect of deferred tax on the investors’ decisions. In light of this discussion, the first question is about the impact of deferred tax on management practices to manipulate earnings, which is called earnings management, the second question is about the value relevance of earnings management, the third question is about the value relevance of deferred tax, and the fourth question is about the mediating effect of earnings management. The paper focuses on listed firms in the Egyptian Stock Exchange (EGX), especially firms that were recorded in EGX 100, for six-year period (2013–2018) for 107 firms and 642 completed observations. The findings are as follows: management uses deferred tax to manipulate earnings, since an increase in deferred tax amounts increases earnings management practices; there is no value relevance of earnings management, which means earnings management practices do not affect the investors’ decisions; there is value relevance of deferred tax, which confirms that deferred tax is one of the determinants that affect the investors’ decisions; there is no value relevance of deferred tax through earnings management as a mediator variable since investors are not interested in earnings management practices to make their investment decisions. This paper investigates the relationship between deferred tax, earnings management, and value relevance in the Egyptian context.

scholarly journals PENGUNGKAPAN LINGKUNGAN PERUSAHAAN: DITINJAU DARI MANAJEMEN LABA DAN MEKANISME TATA KELOLA PERUSAHAAN YANG BAIK

2021 ◽  
Vol 2 (1) ◽  
pp. 94-107
Author(s):  
Kurnia Rahmadani ◽  
Edfan Darlis ◽  
Pipin Kurnia
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Environmental Disclosure ◽  
Test Tool ◽  
Good Corporate Governance ◽  
Corporate Governance Mechanisms ◽  
Panel Data Regression ◽  
Data Regression

The objective of this study is to analyze the influence of earnings management and good corporate governance mechanisms towards corporate environmental disclosure (CED). Good corporate governace mechanisms are measured by the proportion of independent board, the number of audit committee meetings and the size of audit committee. Earnings management is measured by the  modified discreationary accrual Jones model. The population of this study is mining, plantation and manufacturing companies listed in Indonesian Stock Exchange (IDX) in 2015-2017 . The sample of this study was selected with a purposive sampling concept. The company has 5 mining companies, 12 plantation companies and 65 manufacturing companies companies that meet the criteria. Hypothesis testing is carried out using panel data  regression method, with a statistical test tool used, namely Eviews 10.The results of this study indicate that the proportion of independent board have a significant effect on the disclosure of corporate environmental on the level significant 0,05, the number of audit committee meetings have a significant effect on the disclosure of corporate environmental on the level significant 0,00 and the size of audit committee have a significant effect on the disclosure of corporate environmental on the level significant 0,03 in Indonesian mining, plantation and manufacturing companies. Meanwhile, earnings management do not affect the disclosure of corporate environmental have a significant effect on the disclosure of corporate environmental  on the level significant 0,92 in Indonesian mining, plantation and manufacturing companies.

FAKTOR DETERMINAN PEMBENTUK STRUKTUR MODAL PADA PERUSAHAAN SEKTOR FARMASI PERIODE 2012 - 2016

2017 ◽  
Vol 2 ◽  
pp. 241-250
Author(s):  
Neng Ria Kanita ◽  
Hendryadi Hendryadi
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Pharmaceutical Manufacturing ◽  
Manufacturing Companies ◽  
Purposive Sampling ◽  
Panel Data Regression ◽  
Data Regression ◽  
Partial Effects

This study aims to examine the simultaneous and partial effects of profitability, liquidity, and firm size on capital structure. The sample is 10 pharmaceutical manufacturing companies listed in Indonesia Stock Exchange period 2012-2016, using purposive sampling. The technique of analysis used is panel data regression (pooled regression). The results showed that the selected model is the fixed effect. Simultaneously NPM, CR, and Firm Size have a significant effect on capital structure. Partially NPM has a negative and significant effect on capital structure. CR partially have a negative and not significant effect on capital structure. Partially Firm Size have a positive and significant effect on capital structure. Variables that have a significant effect on capital structure are NPM and Firm Size. While CR does not significantly affect the capital structure. Keywords: Capital Structure, Profitability, Liquidity, Firm Size

PENGARUH KONSERVATISMA AKUNTANSI TERHADAP EARNINGS RESPONSE COEFFICIENT (ERC) DENGAN CORPORATE GOVERNANCE SEBAGAI VARIABEL PEMODERASI

2008 ◽  
Author(s):  
Olliza Mayesti ◽  
Resti Yulistia Muslim
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Negative Influence ◽  
Accounting Conservatism ◽  
Managerial Ownership ◽  
Net Income ◽  
Manufacturing Companies ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Earnings Response

The objective of this study is to examine whether corporate governance influence the relation between accounting conservatism and Earnings Response Coefficient (ERC). The accounting conservatism proxy used in this research is accruals obtained from differences between net income and cash flow. Sample consists of 31 manufacturing companies that listed in Indonesian Stock Exchange since 2003­2006. Hypotheses are examined by using multiple regressions. The result shows that there is a negative influence of accounting conservatism to Earnings Response Coefficient. Managerial ownership as a moderating variable did not affect the relation between accounting conservatism and Earnings Response Coefficient, but independent board of commissioner composition as a moderating variable affected the relation between accounting conservatism and Earnings Response Coefficient.

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