The Effect of Earnings Management and Profitability on Stock Prices Future: Information Asymmetry as Moderating

Abstract

Purpose: One of the most popular types of securities in the capital market is stock securities. Stocks that are considered good are stocks that are able to provide realized returns that are not too far from the expected returns, which are reflected in future stock prices. Through information asymmetry, it is expected to see the magnitude of the influence of earnings management on stock prices in the future. The purpose of this study is to examine the effect of earnings management on stock prices in the future with asymmetry as a moderating variable.
 Methods: The method used in this study is a quantitative analysis method with cross-sectional data, using secondary data in the form of financial statements of consumption sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2015 to 2019, with analytical tools using SPSS.22
 Findings: The higher the information asymmetry, the greater the bid-ask spread, in this case, the disclosure of earnings (ROA) in the financial statements is expected to reduce information asymmetry so that the bid-ask spread also decreases which leads to an increase in stock prices the future.
 Novelty: The higher the information asymmetry, the greater the bid-ask spread, in this case, the disclosure of earnings (ROA) in the financial statements is expected to reduce information asymmetry so that the bid-ask spread also decreases which leads to an increase in stock prices the future.