Factors Affecting the Earning Response Coefficient with Real Activities Earning Management as Moderator: Evidence from Indonesia Stock Exchange

Main Article Content

Aminullah Assagaf
Etty Murwaningsari
Juniati Gunawan
Sekar Mayangsari

Abstract

This study aims to explain the phenomenon of the most active companies traded shares in Indonesian stock exchange. This research is motivated to analyze the response of investors to take a decision after presenting the company's financial statements. This study uses panel data consisting of 20 companies selected by purposive sampling method, using a regression model and data processing via SPSS 24. The results of this study found that the variable leverage and capital expenditure variables significantly influence the response of investors to execute the company's stock, thereby affecting the stock return. The level of leverage and significant positive effect on the response of investors, particularly due to the use of debt to investment would increase earnings per share or at a certain amount of equity can boost earnings per share acquisition. Capital expenditure and significant negative effect on the response of investors for investor tend to speculate on short-term period, which means that companies that invest in the early stages will have difficulties liquidity and rate of return will decline, so investors will shift their investment.

Keywords:
Financial management, earning management, and strategic management

Article Details

How to Cite
Assagaf, A., Murwaningsari, E., Gunawan, J., & Mayangsari, S. (2019). Factors Affecting the Earning Response Coefficient with Real Activities Earning Management as Moderator: Evidence from Indonesia Stock Exchange. Asian Journal of Economics, Business and Accounting, 11(2), 1-14. https://doi.org/10.9734/ajeba/2019/v11i230124
Section
Case study

Article Metrics


References

Collins DW, Kothari SP. 1989. An Analysis Of intertemporal And Cross-Sectional Determinants Of Earnings Response Coefficients. Journal Of Accounting And Economics, North-Holland. 11 .1989;143-181.

Murwaningsari E. Simultaneous Testing: Some Factors Affecting Earnings Response Coefficient (Erc). National Symposium on Accounting (Sna) Ke Xi Pontianak. 2008;1-26.

Nofianti N. Effect of Capital Structure, Company Size, And Dividend Policy Against Earnings Response Coefficient. Journal Ekonomi. 2014;13(2):118-147.

Jensen MC, Meckling WH. The Theory Of The Firm: Man Age Rial Behavior Or, Agency Costs And Ownership Structure. Journal of Financial Economics. 1976; 3(4):305-360.

Santoso G. Determinants of Response Gain Coefficient. Parsimonia Science Program Accounting Ma Chung University, Malang. 2015;2(2):69-85.

Scott. WR. Financial Accounting Theory. Prentice Hall of Canada Ltd, 7th Edition; 2014.

ISBN 0132984660, 9780132984669

Paramita, RWD. Firm Size Effect of Earnings Response Against Coefficient (Erc) By Voluntary disclosure As an intervening variable (Study at Manufacturing Companies Listed In Indonesia stock exchange). Journal Wigan. 2012;2(1):64-78.

Diantimala Y. Effects of Conservative Accounting, Company Size, and Default Risk Response Against Gain Coefficient (Erc). Assessing & Accounting Research Journal. 2008;1(1):102-122.

Wijayanti NR, Supatmi. Effects of dividend payout ratio and capital expenditures against earnings response coefficients (erc) with free cash flow as moderating variables. Journal of Business and Economics (JBE). 2008;15(1):1-14.

Ridwan M, Gunardi A. Role of Corporate Governance as a moderating mechanism Earning Management Practices on Firm Value. Journals Trikonomika. 2013;12(1): 49-60.

Moradi M, Salehi M, Erfanian Z. A Study of the Effect of Financial Leverage on Earnings Response Coefficient throughout the Income Approach: Iranian Evidence. International Review of Accounting Banking and Finance. 2010;2(2):103-115.

Roychowdhury S. Earnings management through real activities manipulation, Journal of Accounting and Economics, 2006;42(2006):335-370.

Yushita AN, Rahmawati, Triatmoko H. Influence Mechanism of Corporate Governance, The quality of the External Auditor, And Liquidity on the Quality of Earnings. Journal Economia. 2013;9(2): 141-155.

Pearson. KFRS Report On Certain Enteric Fever inoculation Statistics. Applied Mathematics, University College, London. 1904;1242-1247.