Abstract
Getting information about earnings is important for the parties who are interested in investment in a company. The purpose of this study is to examine the earnings persistence effect toward performance of Indonesian bank listed in Bursa Efek Indonesia (BEI), with company’s size as control variable. This study use a sample of Indonesian bank listed in BEI from 2007 to 2010. Bank’s financial performance is measured using seven indicators, namely Cash and Bank to Total Deposits (CBTD), Loan to Total Deposits (LTTD), Equity to Total Asset (ETTA), Operating Profit Margin (OPM), Net Profit Margin (NPM), Return on Equity (ROE), and Return on Investment (ROI) as dependent variables. Earnings persistence as the independent variable is the regression coefficient of Earning per Share at one year before t (EPSt-1) when it regressed toward EPSt. Bank size is used as control variable. The result of regression model indicates that earnings persistence influence the performance of Indonesian bank listed in BEI. Of the seven measures of bank performance, only LTTD and ROE are not influenced by earnings persistence.
Highlights
The growing business world today indicates the presence of competition among the firms
This study focuses only on earnings persistence as the measure of earnings quality
RESEARCH METHOD Research Design The research uses secondary data of financial statement and quantitative approach (2008). It uses the annual financial statements of bank listed on the Indonesian Stock Exchange (IDX)
Summary
The growing business world today indicates the presence of competition among the firms Such competition led the company's management to provide confidence and show good performance in their activity. Financial reports are used by management to determine the conditions the company facing the company at that time In relation to this case, financial accounting standards (IAI 2010) No. states that the objective of financial statements is to provide information about the financial position, performance, and cash flows of the company for the benefit of the majority of the users so that they can make economic decisions. This can show top management accountability in using resources entrusted to them
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