Subekti, Imam
(2012)
Real And Accruals Earnings Management
And Value Relevance Of Accounting
Information Among Indonesian
Listed Companies.
PhD thesis, Universiti Sains Malaysia.
Abstract
The outbreak of the 1997 East Asian financial crisis, weak corporate governance
practices in Indonesia and their impact on the relations between earnings
management and value relevance of accounting information have motivated the
present study to pursue the following objectives: (1) to examine the tactics employed
by Indonesian public listed companies to conduct earnings management in the
attempt to avoid reporting losses, (2) to investigate the relationship between
accounting information (earnings and book value of equity) and firm value, and (3)
to investigate the effect of earnings management practices on the value relevance of
accounting information. The sample of this study comprises 97 public companies
listed in the Indonesian Stock Exchange over the period of 1995 to 2006 with 1164
firm-years observations. Panel data regression was employed to test the hypotheses.
The results show that Indonesian public companies tend to perform real earnings
management rather than accruals earnings management to avoid reporting losses.
Real activities which are used as vehicle to perform earnings management are cash
flow from operation, production costs, and discretionary expenses. On the other
hand, accruals accounts are managed through the use long-term accruals. The results
also reveal that earnings and book value of equity are still relevant in measuring firm
value
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