Relationship Between Income Smoothing and Earnings Announcement

Abstract

This study aims to obtain empirical evidence and analyzes factors that are affecting earnings response coefficient (ERC). Manufacturing companies are used in this research, which are listed on the Indonesian Stock Exchange from 2016 to 2018. This study used panel data consisting of 114 firm years data. This research is using multiple regression method to examine the effect of independent variable to the dependent variable ERC. The result of this study shows that income smoothing (IS) and systematic risk (SR) have an effect on ERC; while IS, SR, and Firm Growth have an effect on Earnings Announcement; meanwhile, earnings persistence, audit quality, firm size, and leverage have no effect on Earnings Announcement. Implication of the research indicates that investors assess earnings quality of the company for their investment decision. These findings contribute to market reaction on earnings announcement and market-based accounting researches.

Citation

Palupi, A. (2021), "Relationship Between Income Smoothing and Earnings Announcement", Barnett, W.A. and Sergi, B.S. (Ed.) Environmental, Social, and Governance Perspectives on Economic Development in Asia (International Symposia in Economic Theory and Econometrics, Vol. 29A), Emerald Publishing Limited, Leeds, pp. 185-193. https://doi.org/10.1108/S1571-03862021000029A026