Market Response toward Accrual Earnings Management, Real Transactions, and Strategic Revenue Recognition - Earnings Management1

Authors

  • Windy Puspita Dewi Universitas Pelita Harapan Building D-1st Floor, Jl. M.H. Thamrin Boulevard Tangerang, 15811 Banten
  • Antonius Herusetya Universitas Pelita Harapan Building D-1st Floor, Jl. M.H. Thamrin Boulevard Tangerang, 15811 Banten

:

https://doi.org/10.9744/jak.17.2.71-81

Keywords:

Real transaction activities, accrual earnings management, strategic revenue recognition

Abstract

This study investigates how the capital market response to a variety of earnings management tools i.e., accrual-based earnings management, real transaction activities, and strategic revenue recognition. We measure the market response to the information content of earnings by the earnings response coefficient (ERC). By using pooled-OLS regression from 748 firm-years data of public listed companies on the Indonesian Stock Exchange (IDX) in 2004-2009, we find some evidence of a negative association between earnings response coefficients and information content of earnings that contained earnings management. Our study find that real transactions earnings management in operating activities has negative association with earnings response coefficient, but we do not find any evidence from the other earnings management tools. The findings of this study imply that the market participants are able to capture a certain kind of earnings management behaviour that may reduce the earnings response coefficient.

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Published

2016-03-01

How to Cite

Dewi, W. P., & Herusetya, A. (2016). Market Response toward Accrual Earnings Management, Real Transactions, and Strategic Revenue Recognition - Earnings Management1. Jurnal Akuntansi Dan Keuangan, 17(2), 71-81. https://doi.org/10.9744/jak.17.2.71-81

Issue

Vol. 17 No. 2 (2015): NOVEMBER 2015

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Articles

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