DETERMINANTS OF EARNINGS QUALITY OF NONFINANCIAL COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE

Sutopo, Bambang (2012) DETERMINANTS OF EARNINGS QUALITY OF NONFINANCIAL COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE. .

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    Abstract

    Keywords: quality of earnings; debt, dividends, profitability, age, size, growth. This study examines the determinants of earnings quality (quality of earnings information), which include: debt, dividend, profitability, firm age, firm size, and growth. Earnings quality is important because it has the value relevance of earnings quality and has an impact on the cost of capital. However, companies listed on the Stock Exchange are companies with low earnings quality. Therefore, study on the factors that affect the quality of earnings in Indonesia is interesting. The method of analysis used in this study is multiple regression with the quality of earnings as the dependent variable and debt, dividends, profitability, firm age, firm size, and growth as an independent variables. Earnings quality is measured by abnormal accruals, while the independent variables, respectively, measured by: the ratio of debt / equity, cash dividend payment status, return on assets (ROA), financial reporting date of observation minus the year of incorporation date divided by 365, and the market value of the stock divided by the book value. This study used data of financial statements of non-financial companies listed on the Indonesia Stock Exchange (BEI) for the period 2007-2010 for the measurement of variables and the period 2008-2010 for analysis. This study provide empirical evidence that 4 (four) of the six (6) variables tested, namely debt, dividends, profitability, and firm size are associated with earnings quality, while the 2 (two) other variables, namely age and growth companies do not have relationship with the quality of earnings. The results of this study are expected to contribute to the literature of accounting, finance, and capital markets by providing empirical evidence about the determinants of the quality of earnings. It is also expected that findings of this study can be utilized by various parties as consideration in carrying out their respective functions, among others by: investor in investment decisions, management in the reporting of financial information, financial accounting standards board in the preparation of financial accounting standards and capital market authorities in drafting the regulation of capital markets. Keywords: quality of earnings; debt, dividends, profitability, age, size, growth.

    Item Type: Article
    Subjects: H Social Sciences > HG Finance
    Divisions: Lembaga Penelitian dan Pengabdian Kepada Masyarakat - LPPM
    Depositing User: Miftahful Purnanda
    Date Deposited: 26 Apr 2014 18:23
    Last Modified: 26 Apr 2014 18:23
    URI: https://eprints.uns.ac.id/id/eprint/13555

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