The effect of accrual earnings management and real earnings management on earnings persistence and cost of equity
Journal Title: Journal of Economics, Business, & Accountancy Ventura - Year 2014, Vol 17, Issue 2
Abstract
There are two kinds of earnings management: accrual earnings management and real earnings management. This study aims to assess the effect of earnings management on earnings persistence and cost of equity on 155 firms listed on the Indonesia Stock Exchange during the 2001-2010 periods. Analysis in this study uses the Panel Regression Fixed Effect method. The result shows that accrual and real earnings management do not weaken earnings persistence. Furthermore, it was found that accrual earnings management has a positive effect on the cost of equity. Conversely, earnings management through real activity manipulation has a negative effect on the cost of equity. These results may indicate that investors are already aware of a firms earnings management behaviors through discretionary accrual, but may still not be aware of the negative impact of earnings management through real activity manipulation.
Authors and Affiliations
Zumratul Meini, Sylvia Veronica Siregar
Keywords
Related Articles
- EP ID EP468185
- DOI 10.14414/jebav.v17i2.309
- Views 104
- Downloads 0
Snowball Effect of Interest Rate as a Control Instrument On Inflation Framework Targetingin Indonesia
Afterthe monetary crisisthe government changes its monetary policy strategyby using a new paradigm that Inflation Targeting framework. This new paradigm has been confirmed in Law No.23 of 1999and UUNo3 of 2004as the basi...
Forensic Accounting as Antibiotic for Pressing Corruption Infection in Indonesia
Effectiveness of corruption cases aimed at making the corrupt severely punished in a court of corruption and bring the deterrent effect for public officials who intend to engage in corruption. This study aims to explain...
Analysis of financial soundness of manufacturing companies in Indonesia Stock Exchange
This study aims to provide information to the issuer and Bapepam and Indonesian Institute of Accountants with additional important information content of ratings and financial soundness of the indicators that do not harm...
Halo Effect in Subjective Performance Evaluation Bias
This study aimed not only to examine the effect of the objective measure and controllability on subjective performance evaluation but also to prove empirically the halo effect phenomenon which is present in the evaluatio...
The implementation of IFRS in Indonesian Islamic accounting
This research examines the IFRS implementation in Indonesian Islamic accounting. It employs a literature review method to systematically explain the accounting theory, the Islamic Financial Accounting Standards, and Int...