Abstract
The purpose of this study is (1) to analyze the effect of accrual earnings management on the company performance measured with Return On Assets (ROA), (2) to analyze the effect of accrual earnings management on the company performance measured with Tobins Q. This study uses the data of manufacturing companies listed in Indonesia Stock Exchange. The sampling technique used is purposive sampling method. The researcher uses Khotari Model to calculate discretionary accruals as the proxy of earn-ing management, while the company performance in this study is proxied by the indi-cators of Return on Assets (ROA) and Tobins Q. The analysis technique used is descriptive analysis and simple linear regression. The results of this study prove that accrual earnings management affects ROA and Tobins Q. This study also proves that there is a decline in market value when the earnings management is performed.
Highlights
In the era of globalization, the world of business has experienced a rapid growth
RESEARCH METHOD Sample Classification The population is manufacturing companies listed in Indonesia Stock Exchange (IDX) from 2008 to 2011
The data is in the form of financial statements issued by manufacturing companies listed in Indonesia Stock Exchange and as the supporting tools of the Indonesian Capital Market Directory (ICMD)
Summary
In the era of globalization, the world of business has experienced a rapid growth. It can be seen from the increasing number of new companies. This rapid development has led to the increased competition, which can further create the higher value of the company and improve the company performance. One of the components used to assess the performance of the company is financial statement. The financial statement becomes the primary information tool for the company to deliver financial information regarding the accountability of the management. The delivery of information via this financial statement needs to be done to meet the needs of the internal and external parties
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