Abstract
The study aims to test the direct and indirect effects of earnings management on earnings persistence through different tax books. Opportunistic earnings management results can reduce persistence of accruals. A decrease in accrual persistence will reduce earnings persistence. Different book tax variable was added as an alternative explanation. Earnings management can increase the book tax different reported by the company. A high tax different book can also reduce earnings persistence. A high tax different book is a signal of poor earnings quality. The population of this study is companies listed on the Indonesia Stock Exchange. The sample of this research is manufacturing companies listed on the Indonesia Stock Exchange in 2012-2018. Data analysis methods used in this study were descriptive statistics and path analysis. The path analysis results prove that there is an indirect effect of earnings management on earnings persistence through different tax books. The results of the study prove that there is no direct influence of earnings management on earnings persistence.Keywords: Book Tax Different; Earnings Management; Earnings Persistency.
Highlights
Earnings is the concern of potential investors and investors to assess the company
R2total = 1 –0,9822.0,9862 = 0,061 The coefficient of total determination (R2total) of 0.061 means that the information contained in the 6.1% data can be explained by the analysis model of the relationship between variables, while the remaining 93.9% by other factors not included in this study
book tax different (BTD) is thought to mediate the influence of management variables (ML) on the PL
Summary
Investors need quality earnings to value the company. Persistent Earnings is one of the characteristics of quality earnings. Persistent earnings are earnings that reflect the sustainability of future earnings (Penman & Zhang, 2002). The first view states that persistent Earnings is shown by the long-term sustainability of earnings. Persistent earnings indicate a company's long-term sustainable performance, so that current year's earnings can be used to estimate future earnings (Penman & Zhang, 2002; Richardson, 2003) and relate to operating cash flows in the future (Cohen, 2005; Dechow & Dichev, 2002). The second view is earnings persistence shown by the relationship between earnings and returns. The higher the relationship of earnings with returns, the higher the persistence of earnings (Lev & Thiagarajan, 1993)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
