Abstract
This study is driven by the phenomenon of earnings indicators that can mislead investors due to managers' personal interests. As a result, investors would seek alternative earnings through analysts serving as intermediaries, referred to as street earnings. Street earnings are considered more predictive, informative, and more likely to be used to assess firm value. Furthermore, non-financial information from the corporation can affect street earnings. As a result, this study attempts to determine whether street earnings affect firm value while also determining whether it can mediate the relationship between non-financial information on firms with firm value. This analysis makes use of 392 observations from manufacturing firms between 2015 and 2020. SPSS 25 and the Sobel test are used to conduct data analysis. One of the three hypothesis is proven, namely that research and development activities directly and indirectly affect street earnings and firm value. If street earnings can moderate the relationship between the two variables, this conclusion is also supported by the Sobel test.
Highlights
This study is motivated by the phenomenon of company earnings indications that can mislead investors
This study examined the direct and indirect effects of three non-financial information on firm value through street earnings
The sample is drawn from all manufacturing companies in Indonesia that do not have a negative equity value and that present financial statements in the rupiah currency. 3.2 Variables and measurements Three independent variables, one intervening variable, one dependent variable, and three controlling variables are used in this study to test hypotheses using path analysis and the Sobel test. 3.2.1 Path analysis Path analysis is a subset of multiple linear regression analysis, or it is the application of regression analysis to estimate a predefined causal relationship based on theory
Summary
This study is motivated by the phenomenon of company earnings indications that can mislead investors. This is because the company's earnings are generated by managers who have a personal incentive to increase bonuses (Beneish, 2001; Moradi et al, 2015). Investors will seek alternative sources of earnings information, one of which by securities analysts (Bardos et al, 2011). Securities analysts are viewed as more independent because their role is limited to serving as a liaison between investors and companies (Barker et al, 2008). The analyst will publish street earnings as a result of the analysis (Sadique & Rahman, 2013). Street earnings are generated by adjusting for non-recurring items on the income statement
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