The Effect of Company Characteristics on Relationship between Overinvestment and Future Earnings Response Coefficient : Board of Director, Audit Committee and Manager’s Characteristics

2021 ◽  
Vol 46 (6) ◽  
pp. 254-295
Author(s):  
Do Youn Kim ◽  
Jeong Ok Kim
Keyword(s):  
Audit Committee ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Board Of Director ◽  
Response Coefficient ◽  
Earnings Response

scholarly journals The Impact of Corporate Social Responsibility Disclosure on the Future Earnings Response Coefficient (ASEAN Banking Analysis)

2020 ◽  
Vol 12 (22) ◽  
pp. 9671
Author(s):  
Istianingsih ◽  
Terri Trireksani ◽  
Daniel T. H. Manurung
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Corporate Social Responsibility Disclosure ◽  
Response Coefficient ◽  
The Future ◽  
Earnings Response ◽  
Size Growth ◽  
Corporate Social

Corporate social responsibility in the banking industry has an impact on the environment and society. Research was conducted on the impacts of environmental social responsibility disclosure on future income response coefficients of The Association of South East Asian Nations (ASEAN) Banking to determine the level of concern ASEAN banks have in disclosing corporate responsibility, and to understand the levels of future revenue response coefficients. The variable in this research was measured by corporate social responsibility disclosure, while the variable of the Future Earnings Response Coefficient (FERC) was based on the value of banking stocks. Other variables—size, growth, earning persistence, and earnings volatility—were the control variables. The sampling method used was a purposive sampling approach; a research sample of 280 banks in 5 ASEAN countries was determined with this provision: banking report data were taken from the stock exchanges of each country and sustainability reports, using the Global Reporting Initiative (GRI) standard version 4 (G4) from 2014 to 2018. The researchers used conducted multiple regression analysis to examine the variables. The analysis tools used included panel data, so that data processing was carried out using review software. The results of the study show that corporate social responsibility disclosure has a positive and significant effect on the future earnings response coefficient, whereas other variables (i.e., company size, growth, and earnings persistence), do not have a relationship with the disclosure of corporate responsibility or FERC. Only the volatility of earnings has an influence on disclosure of corporate social responsibility and FERC.

scholarly journals PENGARUH INCOME SMOOTHING, KEBIJAKAN DEVIDEN, LEVERAGE DAN UKURAN PERUSAHAAN TERHADAP EARNINGS RESPONSE COEFFICIENT DAN FUTURE EARNINGS RESPONSE COEFFICIENT

2019 ◽  
Vol 11 (1) ◽  
pp. 31 ◽  
Author(s):  
Amrie Firmansyah ◽  
Vinola Herawaty
Keyword(s):  
Stock Returns ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Negative Influence ◽  
Income Smoothing ◽  
Financial Data ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Earnings Response

<p class="Style1"><em>This study is aimed to examine the effect of income smoothing, dividend policy, </em><em>leverage and firm size on earnings response coefficient and future earnings response </em><em>coefficient. The population used in this study are all non</em><em><sub>:</sub></em><em>financial companies listed in </em><em>Indonesia Stock Exchange</em><em><sub>.</sub></em><em>from 2007 until 2013. The main data used in this research is </em><em>the data in 2011 and 2012. This research uses financial data from 2007 because the </em><em>data required in the calculation of income smoothing over the last 5 years for income </em><em>smoothing in 2011, while stock returns data in 2013 reflects the future returns for 2012. Completed and selected financial data </em><em>this research are 103 companies, so that </em><em>the samples in this research using 2-year period are 206. For examining data, this </em><em>research uses panel data regression model. After running chow test and hausman test, </em><em>the most suitable method for the regression is fixed effects method. This research shows </em><em>that income smoothing has positive influence significantly on ERC, but has negative </em><em>influence significantly on FERC. While, leverage has no influence significantly on </em><em>ERC, but has negative influence significantly on FERC. Furthermore both dividends </em><em>andfirm size have no influence on ERC and FERC.</em></p>

scholarly journals Earnings Response Coefficient : CSR Disclosure, Audit Committe and Default Risk

2020 ◽  
Vol 4 (3) ◽  
pp. 414-422
Author(s):  
Miftah Kamal Nuriyanto ◽  
Annisa Nurbaiti ◽  
Wiwin Aminah
Keyword(s):  
Default Risk ◽  
Audit Committee ◽  
Sampling Technique ◽  
Observation Time ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Analysis Technique ◽  
Earnings Response ◽  
Statistical Analysis Technique ◽  
Csr Disclosure

An investor needs to collect financial information as a matter of consideration in making his economic decision by using earning response coefficient. The value of ERC that appears will be goodnews when the value is raised high and will be badnews when the value of ERC is low. This research aims to test how the influence of CSR Disclosure, Audit Committee and Default Risk to Earnings Response Coefficient. The research was conducted on the basic and chemical industry sectors list on the IDX from 2015 to 2018. By using pusposive sampling technique obtained as many as 23 companies with 4 years observation time obtained amount 92 observations. Outliers performed 11 observations so that the number of observations used was 81 observations with Non-probability sampling. This research uses a descriptive statistical analysis technique and a data panel regression method. Results showed that the CSR Disclosure, Audit Committee, Default Risk simultaneously, has an influence on the earnings response coefficient. Partially, audit committee has a negative affect on the earnings response coefficient. While the CSR Disclosure and Default Risk has no affect on the earnings response coefficient.

scholarly journals PENGARUH KUALITAS AUDIT, KEPEMILIKAN INSTITUSIONAL, DAN INVESTASI JANGKA PANJANG TERHADAP FUTURE EARNINGS RESPONSE COEFFICIENT (FERC) PADA PERUSAHAAN YANG TERDAFTAR DI BURSA EFEK INDONESIA

2019 ◽  
Vol 12 (1) ◽  
pp. 21
Author(s):  
Williem Williem ◽  
Titik Aryati
Keyword(s):  
Audit Quality ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Positive Influence ◽  
Annual Reports ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Earnings Response

<p class="Style1"><em>The objective of this research was to examine the effect of audit quality, institutional ownership, and long-term investment to the future earnings response coefficient (FERC) on companies listed in the Indonesia Stock Exchange. The research data was obtained from annual reports and financial sites Indonesian Stock Exchange </em>(BEI). <em>Total samples used in this research as many as 126 samples. This research uses </em><em>multiple regression analysis. The results of this study indicate that (1) audit quality </em><em>positive influence on FERC, (2) institutional ownership does not influence on FERC, </em><em>(3) long-term investments negatively influence on FERC.</em></p><p class="Style1"><strong><em><br /></em></strong><strong><em></em></strong></p>

A model of stock prices leading earnings

2018 ◽  
Vol 44 (7) ◽  
pp. 935-952
Author(s):  
Jay Junghun Lee
Keyword(s):  
Stock Returns ◽  
Analytical Model ◽  
Stock Prices ◽  
Time Lag ◽  
Relevant Information ◽  
Content Type ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Earnings Response

Purpose Prior literature suggests that stock prices lead earnings in reflecting value-relevant information because accounting income incorporates information discretely to satisfy recognition principles while stock prices incorporate it continuously. The purpose of this paper is to derive an analytical model that relates the time lag of earnings to the incremental informativeness of future anticipated earnings in equity prices after controlling for current realized earnings. Design/methodology/approach This study models the extent to which forward-looking information about future earnings is capitalized into current stock returns. Specifically, this study derives an analytical future earnings response coefficient (FERC) model that regresses current stock returns on both current and future earnings surprises, and examines the properties of the regression coefficients on current earnings (i.e. current earnings response coefficient, CERC) and future earnings (i.e. FERC). Findings The analytical FERC model shows that the pricing coefficient on future earnings (FERC) is positive in the presence of stock prices leading earnings. More importantly, the pricing coefficient on future earnings (FERC) increases with the recognition lag, but the pricing coefficient on current earnings (CERC) decreases with the lag. The results suggest that recognition principles that intend to enhance the reliability of earnings inadvertently lower the timeliness of earnings and, thus, shift the investors’ demand for value-relevant information from current realized earnings to future anticipated earnings. Originality/value This study makes two major contributions. First, it fills the gap between the lack of an analytical model and the abundance of empirical findings in previous FERC studies. As the recognition lag of earnings increases, stock investors shift the pricing weight on value-relevant information from current realized earnings to future anticipated earnings. Second, it provides support for the validity of the FERC model as an empirical model that examines the lack of earnings timeliness. As the timeliness of earnings relative to stock prices declines, the FERC increases but the CERC decreases.

Valuation of Permanent, Transitory, and Price-Irrelevant Components of Reported Earnings

1998 ◽  
Vol 13 (3) ◽  
pp. 301-336 ◽  
Author(s):  
Ram T. S. Ramakrishnan ◽  
Jacob K. Thomas
Keyword(s):  
Stock Prices ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Unexpected Earnings ◽  
Response Coefficient ◽  
Risk Result ◽  
Earnings Response ◽  
Beta Risk ◽  
Different Response ◽  
Reported Earnings

Both the economic nature of events and extant accounting rules cause reported earnings to have different components, each with different valuation implications. The price-earnings link is described better by separating components of unexpected earnings and multiplying each by a different response coefficient, rather than applying a single earnings response coefficient (ERC) to aggregate unexpected earnings. Using a simple model that assumes three types of innovations to reported earnings (permanent, transitory, and price-irrelevant), we develop systematic links among current earnings components, future earnings, and stock prices. Empirical tests of the model's predictions confirm the validity of our characterization of the price-earnings link. Attempts to understand better the effects of growth and (beta) risk result in little improvement.

scholarly journals PENGARUH PUBLIC OWNERSHIP DAN GROWTH OPPORTUNITY TERHADAP LEVERAGE DAN FUTURE EARNINGS RESPONSE COEFFICIENT

2017 ◽  
Vol 1 (1) ◽  
pp. 135
Author(s):  
Henny Henny
Keyword(s):  
Direct Effect ◽  
Indirect Effect ◽  
Leverage Effect ◽  
Public Ownership ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Growth Opportunity ◽  
Earnings Response ◽  
Positive Effect

The purpose of the study to obtain empirical evidence regarding (1) The direct effect to Future Earnings Response Coefficient: (a) Public Ownership positive effect on Future Earnings Response Coefficient, (b) Growth Opportunity positive effect on Future Earnings Response Coefficient, (c) Leverage negatively affect Future Earnings Response Coefficient. (2) The indirect effect to Future Earnings Response Coefficient, through Leverage: (a) Public ownership through a leverage effect on Future Earnings Response Coefficient, (b) Growth Opportunity through a leverage effect on Future Earnings Response Coefficient. (3) The effect of direct and indirect effect that has the most significant effect on Future Earnings Response Coefficient. The method used is the Structure Equation Model (SEM) using AMOS 22, 2008-2011 with the data used from the years 2007 to 2014, bringing the total number of samples observed data 273 manufacturing companies. The results showed a variable that has a direct effect to Future Earnings Response Coefficient is variable Public Ownership, Growth Opportunity and Leverage, while the variable that most effect directly to Future Earnings Response Coefficient is variable Leverage. The variables that have an indirect effect to Future Earnings Response Coefficient through leverage is variable of  Growth Opportunity, so variable of Growth Opportunity through this leverage that most have indirect effect on Future Earnings Response Coefficient.Keywords: Future Earnings Response Coefficient, Growth Opportunity, Leverage, and Public Ownership

scholarly journals PENGARUH KEPEMILIKAN MANAJERIAL DAN KEPEMILIKAN INSTITUSIONAL TERHADAP FUTURE EARNINGS RESPONSE COEFFICIENT DENGAN KESEMPATAN PERTUMBUHAN SEBAGAI VARIABEL MODERASI

2020 ◽  
Vol 4 (2) ◽  
pp. 374
Author(s):  
Henny Henny ◽  
Thio Lie Sha
Keyword(s):  
Regression Analysis ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Manufacturing Companies ◽  
Growth Opportunities ◽  
Purposive Sampling ◽  
Future Earnings ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Earnings Response

Tujuan penelitian ini adalah untuk memperoleh bukti empiris mengenai pengaruh kepemilikan manajerial dan kepemilikan institusional terhadap future earnings response coefficient dengan kesempatan pertumbuhan sebagai variabel moderasi pada perusahaan manufaktur di Bursa Efek Indonesia. Populasi dalam penelitian ini merupakan perusahaan manufaktur yang memenuhi kriteria penelitian, sehingga penarikan sampelnya sebanyak 36 perusahaan manufaktur dengan menggunakan metode purposive sampling. Analisis yang digunakan dalam penelitian ini adalah moderated regression analysis.  Hasil penelitian ini adalah kesempatan pertumbuhan sebagai variabel moderasi memperkuat hubungan positif kepemilikan manajerial dan kepemilikan institusional terhadap future earnings response coefficient, sedangkan kepemilikan manajerial dan kepemilikan institusional tidak berpengaruh langsung terhadap future earnings response coefficient. The purpose of this study is to obtain empirical evidence about the effect of managerial ownership and institutional ownership on future earnings response coefficient with growth opportunities as a moderating variable in manufacturing companies in the Indonesia Stock Exchange. The population in this study is a manufacturing company for the period 2010-2017 that meets the research criteria, so that the sample is 36 manufacturing companies using the purposive sampling method. The analysis used in this study is moderated regression analysis with SPSS. The results of this study is growth opportunities as a moderating variable to strengthen the positive relationship of managerial ownership and institutional ownership on future earnings response coefficient, while managerial ownership and institutional ownership do not directly influence future earnings response coefficient.

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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