Earnings Persistence Research Articles

PENGARUH VOLATILITAS PENJUALAN, DAN TINGKAT HUTANG TERHADAP PERSISTENSI LABA DENGAN TAX AVOIDANCE SEBAGAI MODERASI

The purpose of this study was conducted to examine and analyze the influence of sales volatility and debt levels on earnings persistence. Moderating Variables are useful for knowing whether these variables can strengthen or weaken the independent variable on the dependent variable. The research population is 118 companies in the Primary Consumer Goods (Consumer Non-Cyclicals) sector which are listed on the Indonesia Stock Exchange in 2017 – 2021. The type of research used is quantitative using secondary data. The method of determining the sample using purposive sampling. The number of samples is 56 companies. The research results show that sales volatility and debt levels moderated by tax avoidance simultaneously affect earnings persistence. Sales volatility affects earnings persistence. The level of debt has no effect on earnings persistence. Partially, the tax avoidance moderating variable has no effect on earnings persistence. In this study, tax avoidance was not able to moderate the relationship between sales volatility and earnings persistence, as well as the debt level variable, which was moderated by tax avoidance, proving that tax avoidance was not able to moderate the relationship between debt levels and earnings persistence.

The Effect of Earning Persistence and Growth Opportunities on Future Earning Response Coefficient with Public Ownership as Moderation

The role of public ownership in moderating the effect of earning persistence and growth opportunities on the future earnings responses’ coefficient is the focus of this study. Understanding the background of these concepts provides context for the research. This study aims to determine the role of public ownership in moderating the effect of earning persistence and growth opportunities on future earnings responses coefficient. This research uses companies in the Consumer Cyclicals sector and the Consumer Non-Cyclicals sector during the 2018-2021 period. Sampling method with purposive sampling. The results of this study indicate that earnings persistence affects the Future Earning Responses Coefficient. Growth Opportunities have no effect on the Future Earning Responses Coefficient. The role of public ownership is able to strengthen the effect of earning persistence and Growth Opportunities on Future Earning Responses Coefficient.

The Effect of Investment Opportunity Set (IOS), Earnings Persistence and Accounting Conservatism on Earnings Quality with Voluntary Disclosure as an Intervening Variable

The main problem of this research is earnings quality. Earnings quality is very important for investors and is the center of attention for users of financial statements, because it will help them reduce information risk. Investors will tend to calculate information risk by conducting analysis so that it does not contain a large risk of loss. Investors can know that there is a poor allocation of resources in companies with low earnings quality. The purpose of this study is to determine the effect of investment opportunity set, earnings persistence and accounting conservatism on earnings quality in food and beverage companies listed in ISSI in 2018-2021 with voluntary disclosure as an intervening variable. This research is classified as a quantitative research with a population of 25 food and beverage companies registered at ISSI. The research sample was determined by purposive method with certain criteria so that the sample used was 18 companies. so that 72 data were obtained from the sample in the 2018-2021 observation period. the type of data used is secondary data. to test the intervening variables used path analysis method. The research results show that the investment opportunity set, earnings persistence and accounting conservatism and voluntary disclosure have a negative effect on earnings quality. the variables ios and conservatism have a negative and significant effect on earnings quality, while the earnings persistence variable has a positive effect on quality. The results of this study also indicate that voluntary disclosure is only able to mediate accounting conservatism on earnings quality.

PENGARUH LEVERAGE DAN ARUS KAS OPERASI TERHADAP PERSISTENSI LABA PADA PERUSAHAAN MANUFAKTUR

This research aims at how the role of the leverage and operating cash flow on earnings persistence in manufacturing companies listed on the Indonesia Stock Exchange during 2018-2020. Sample was selected using purposive sampling method and obtained 83 companies. Data processing techniques using multiple regression analysis what helped by using Eviews Version 9.5. The results of this study indicate that leverage has a positive and significant effect while operating cash flow has a negative and significant effect on earnings persistence. The implication of this research is the need for the role of earnings persistence in increasing leverage and operating cash flow to provide benefits for the company in generating good profits.

Narrative tone and earnings persistence

This study contributes to the accounting literature on the intersection between earnings quality and the linguistic features of firms’ financial disclosures. Specifically, it examines the relationship between earnings persistence as an attribute of earnings quality and the tone of United Kingdom annual reports. The expectations-adjustment hypothesis suggests that firms with more persistent earnings streams have incentives to signal their superior earnings quality to capital providers by increasing the positive tone of financial disclosures. Consistent with this hypothesis, this study provides evidence of a positive association between the annual report tone and earnings persistence. Additional analysis reveals that this association is less pronounced in technology firms than non-technology firms. Separating the sample into profit firms and loss firms suggests that the tone is positively associated with the persistence of profits but exhibits no association with the persistence of losses. Disaggregating the tone into positive and negative components indicates that negative tone has a stronger and more negative association with earnings persistence than positive tone. Further, negative tone is negatively associated with earnings persistence in both profit firms and loss firms. In contrast, positive tone is not associated with earnings persistence in profit firms but is negatively associated with earnings persistence in loss firms.

Can Audit Quality Predict Earnings Persistence?

Research on the impact of audit quality on earnings persistence is of interest to managers, investors, and researchers. However, the results have been inconsistent. Therefore, this study was undertaken to examine the link between audit quality and earnings persistence with audit firm size as a measure of audit quality. Quantitative analysis was adopted to analyse a sample of 228 listed firms in the Vietnamese stock market between 2014 and 2017. Findings suggested that audit quality has a positive effect on earnings persistence. This trend was also true for firm size and cash ratio, while debt ratio and firm age negatively impacted earnings persistence. The research contributes to current literature by proposing viable solutions for functional government agencies, audit companies, and enterprise managers in improving the quality of auditing and information disclosed.

The effect of real earnings management on earnings persistence and informativeness before and during COVID‐19

AbstractThis study examines the effect of real earnings management (REM) on earnings persistence and informativeness and also considered in the context of the COVID‐19 pandemic. REM is quantified by two aggregate metrics. The sample consists of 2256 firm‐year observations of listed companies in Vietnam from 2016 to 2021. We find evidence that REM is negatively associated with the persistence of earnings and its components, with REM affecting cash flows more strongly than accruals. We also find that REM limits the relationship between current earnings and future cash flows. Furthermore, when confronted with the COVID‐19 pandemic, the effect of REM on earnings quality does not improve.

Sales Volatility, Operating Cash Flow Volatility, Debt, and Firm Size on Future Earnings Persistence

This study aims to find out the impact of sales volatility, operating cash flow volatility, debt, and firm size on earnings persistence in agricultural sector companies listed on the Indonesia Stock Exchange for the period 2009-2022. The sample in this study is 14 companies using the purposive sampling method. This type of research is quantitative research. The analytical tool used was SPSS with multiple linear regression testing. The results of the tests carried out are that sales volatility has a negative and insignificant effect on future earnings persistence, conversely, the volatility of operating cash flows and debt has a positive but not significant impact on future earnings persistence, but firm size have positive effect on future earnings persistence in agricultural sector companies listed on the Indonesia Stock Exchange for the 2009-2022 period. Suggestions can be submitted to management to monitor the company's sales value so that there are no significant changes in a very short period of time, and avoid recording errors or manipulation of the company's sales value.

Earnings persistence determinants in Indonesia’s consumer goods companies

This study aims to investigate the effect of various financial factors that affect the consumer product sectors in the Indonesia Stock Exchange earnings persistence. The study employed purposive sampling, the data were collected from the 2011-2020 annual financial statements, and analyzed by utilizing panel data regression. In the consumer cyclical industry, firm size and accrual amount negatively influence earnings persistence. In contrast, the impact of fluctuating cash flow, volatile sales, and debt levels was negligible. In the non-cyclical consumer sector, cash flow volatility positively influenced earnings persistence. However, debt levels and accrual amounts had a negative influence, while sales volatility and firm size had no effect. These findings suggest that the determinants of earnings persistence vary by industry and that different financial factors may affect earnings persistence differently. The results may help Indonesian stakeholders in comprehending the factors that affect the sustainability of revenues in the consumer products industry.

Cash Flow, Firm Size, and Earnings Persistence: Debt as Moderator

This quantitative study aims to examine the impact of operating cash flow on earnings persistence, considering debt level as a moderating variable. Additionally, the study investigates the influence of firm size on earnings persistence, also with debt level as a moderating variable. The research employs Moderated Regression Analysis (MRA) using SPSS software. Classical assumption tests, including normality, multicollinearity, autocorrelation, and heteroscedasticity tests, are conducted prior to MRA. The findings align with previous research, indicating that debt level does not moderate the relationship between firm size and firm value. These results contribute to the understanding of the dynamics between operating cash flow, firm size, earnings persistence, and debt level, providing insights for financial decision-makers in managing and interpreting financial performance indicators.
 Highlights:
 
 This quantitative study examines the influence of operating cash flow on earnings persistence, with debt level as a moderating variable.
 It also investigates the impact of firm size on earnings persistence, with debt level as a moderating variable.
 The research utilizes Moderated Regression Analysis (MRA) and conducts classical assumption tests to validate the findings. The results reveal that debt level does not moderate the relationship between firm size and firm value, contributing to the understanding of financial dynamics in organizations.
 
 Keywords: Operating cash flow, Earnings persistence, Debt level, Firm size, Moderating variable.

Pengaruh Tata Kelola Perusahaan dan Struktur Kepemilikan Terhadap Persistensi Laba Perusahaan Properti di Masa Covid-19

Profit persistence refers to a stable and sustainable profit trend in the future. The purpose of this study is to analyze and test the effect of the composition of the board of commissioners, audit committee, and managerial ownership on the persistence of profits in property companies during the Covid-19 pandemic. The data analysis method used in this study is descriptive statistical analysis, and inferential statistical analysis using multiple regression to test the research hypothesis. The results showed that (1) the composition of the board of commissioners proved to have no significant effect on the persistence of earnings in LQ45 index property companies during the Covid-19 period. (2) The Audit Committee has been proven to have no significant effect on the persistence of earnings in LQ45 index property companies during the Covid-19 period. (3) Managerial Ownership has been shown to have no significant effect on the persistence of earnings in LQ45 index property companies during the Covid-19 period. Profit persistence is influenced by several factors, but one of them is corporate governance.

Current earnings, persistence and schooling returns

PurposeThe aim is to study the impact of schooling on between-groups wage inequality beyond the lens of the standard approach in the literature.Design/methodology/approachSimple econometric theory is used to make the main point of the paper. Supporting empirical evidence is also presented.FindingsDisregarding the persistence of current earnings implies a bias in the estimation of the wage return to schooling both at labour-market entry and in the rest of the working life.Research limitations/implicationsThe use of current earnings as a dependent variable in wage-schooling models may be problematic and requires specific handling.Social implicationsThe impact of schooling on the between-groups dimension of wage inequality may be different than previously thought.Originality/valueThe paper is the first to show that, when current earnings are used as a dependent variable, the identification of a wage-schooling model with the standard (time-invariant external instrument-variable) approach may lead to misleading conclusions.

EFFECT OF DEFAULT RISK, ACCOUNTING CONSERVATISM, PROFIT PERSISTENCE AND AUDIT QUALITY ON EARNINGS RESPONSE COEFFICIENT (ERC) IN NON-FINANCIAL COMPANIES REGISTERED ON THE INDONESIAN STOCK EXCHANGE (IDX) IN 2019-2021

This study aims to examine the effect of default risk, accounting conservatism, earnings persistence and audit quality on earnings response coefficient (ERC). The population in this study are non-financial companies listed on the Indonesia Stock Exchange (IDX) for 2019-2021 with a total of 673 companies. Sampling in this study used purposive sampling and obtained as many as 118 companies with 354 observational data. This research is a quantitative research with secondary data sources including the company's annual financial reports obtained through the websitewww.idx.co.idand stock prices obtained through the sitehttp://finance.yahoo.com. Data collection techniques in this study are the method of documentation and literature study.Data analysis in this study used panel data regression using EViews 12 software. The results showed that default risk had no significant effect on earnings response coefficient (ERC), accounting conservatism and earnings persistence had no significant positive effect on earnings response coefficient (ERC). And audit quality has a negative and significant effect on earnings response coefficient (ERC).

Share pledge and earnings persistence: evidence from China

ABSTRACT This paper studies the effect of share pledges on earnings persistence and the mechanism that explains the effect. We find that both the existence of share pledges and the percentages of pledged shares are negatively related to firms’ earnings persistence, and the results are robust to the DID analysis. Our results indicate that firms with share pledges are more likely to engage in upward earnings management, resulting in diminished earnings persistence. We further find that the negative effect of share pledges on earnings persistence is most significant among non-SOEs, followed by local government-controlled SOEs, and insignificant among central government-controlled SOEs. The effect is mitigated when firms are subject to better audit monitoring or have higher institutional ownership.

Financial Leverage, Firm Size, Company Age, and Earning Persistence: Evidence From Indonesia

Everlasting earnings are needed for the firms to continue their business, and it becomes an expectation for the stakeholders, such as creditors, shareholders, and managers. Therefore, this study intends to prove the determinants of these earnings persistence. At least three factors are available based on the literature review: financial leverage, firm size, and company age. To make the study focus, it treats financial leverage as the primary variable, and the others become the control. By utilizing the quantitative design based on statistical testing, this study attempts to answer this issue. This study uses the firms in the infrastructure, utilities, and telecommunication sectors in the Indonesian capital market as the population and samples, the probability of t-statistic in the regression model to examine the prearranged hypotheses to achieve this destiny. Once analyzing the data from 2016 to 2019 of 25 companies taken by the simple random sampling technique, this research demonstrates that financial leverage and company age negatively influence this persistence; however, company size exhibits a positive impact. Based on the primary relationship evidence, this study suggests that firms reduce debt levels to avoid future failure, technical insolvency, and bankruptcy. Therefore, they can create earnings persistence from their managed business.

The impact of earnings quality on corporate cash holdings: evidence from an emerging economy

Purpose This study aims to inspect the impact of earnings quality on corporate cash holdings of Jordanian companies listed on the Amman Stock Exchange. Design/methodology/approach This study examines a large sample of (98) Jordanian companies listed on the Amman Stock Exchange during the period that ranges from 2009 to 2019. Earnings quality was computed using two different methods; firstly, through the absolute abnormal discretionary accruals (as an inverse measure of earnings quality), which were estimated using the Dechow et al.’s (1995) cross-sectional version of the Modified Jones model and the Kothari et al. (2005) model; and secondly, through earnings persistence as a direct measure of earnings quality. Findings The empirical results of this study reveal that poor accounting quality (high levels of abnormal discretionary accruals) is associated with higher levels of cash holdings, implying that as the quality of earnings decreases, the harmful effects of information asymmetry and adverse selection costs will increase, leading, therefore, Jordanian companies to increase their corporate cash holdings levels to act as a buffer against any cash shortages. Further, the authors document that higher accounting quality (more persistent earnings) is associated with lower levels of cash holdings. In addition, this study found that earnings quality negatively and significantly affects the cash holdings of profitable companies in Jordan. Thus, earnings quality appeared to be a significant determinant of cash holdings for profit-making companies but not for companies enduring losses. Originality/value This study contributes to the limited evidence that investigates the relationship between earnings quality and corporate cash holdings. Where the majority of previous studies have focused on developed economies, to the best of the authors’ knowledge, this study is the first in Jordan to comprehensively explore the relationship between earnings quality, computed by the absolute abnormal discretionary accruals and earnings persistence, and corporate cash holdings. Also, it is the first to explore the nature of the earnings quality-cash holding nexus in loss-making companies compared with their profit-making counterparts to the best of the authors’ knowledge. The results of this study have important policy implications for managers, creditors, investors and academics in Jordan and other emerging economies that share similar characteristics.

Disclosure of Organizational Ambidexterity Activities and Earnings Quality in Oman

Purpose: This study examines the association between organizational ambidexterity disclosure (OAD) and earnings quality (EQ) in terms of earnings persistence (PER) and value relevance (VR). Theoretical framework: Organizational ambidexterity disclosure (OAD) is one type of forward-looking disclosure (FLD) which includes all information about exploration and exploitation activities. In accounting, the study is interested in how (OAD) affects the firm’s earnings quality. Design/methodology/approach: This study uses the secondary data of non-financial industrial and services firms listed on the Muscat Securities Market (MSX) in Oman for a 5-year period from 2017–2021. The study uses generalized least square (GLS) and feasible general least squares (FGLS) regressions to test the hypotheses and find the results. Findings: Results of the GLS and the robust results of FGLS show that OAD has a positive and significant effect on earnings persistence (PER) and value relevance (VR) and the coefficient of VR is stronger than the coefficient of PER, indicating the importance of OAD on the earnings quality as new evidence in the area of accounting. Research Implications: The results provide crucial implications for researchers, investors, policy makers and managers. The study provides potential leverage points for those responsible for shaping the disclosure and transparency because of it insights on when OAD impacts EQ. Originality/value: This study offers a novel resource-based perspective to explain how Omani firms achieve higher sustainable and value relevance earnings by investing in OA. It also provides new evidence about how an ambidextrous firm improves the sustainable and value relevance earnings.

Financial asset allocation duality and enterprise upgrading: empirical evidence from the Chinese A-share market

This study selects the financial data of Chinese non-financial listed companies from 2012 to 2021 as the research sample and empirically examines in detail the impact of financial asset allocation on enterprise upgrading and its mechanism. The study finds that financial assets have a dual influence on enterprise upgrading. Short-term financial assets provide the necessary funds for production activities, thus promoting enterprise upgrading. Long-term financial assets crowd out the funds needed for production activities and thus inhibit enterprise upgrading, resulting in an inverted U-shaped relationship between financial assets and enterprise upgrading. Mechanism testing revealed that risk-taking capacity and earnings persistence are important ways in which financial assets affect enterprise upgrading. In addition, the impact of financial assets on enterprise upgrading differs for different types of financial assets. The financial asset significantly impacts the upgrading of over-indebtedness, non-state-owned, and high financing constraints enterprises. This study enriches the research literature on financial assets and enterprise upgrading and provides new micro evidence for understanding the impact of financial assets on the enterprise upgrading of listed companies.

Analisis Kualitas Laba Perusahaan Sebelum dan Selama Pandemi Covid-19 pada Perusahaan yang Terdampak Besar Pandemi Covid-19

This study is aims to compare the earnings quality before and during the Covid-19 pandemic. The population is all companies were most affected by the Covid-19 pandemic pandemic, namely the accommodation and restaurant, transportation, and trade sub-sector companies listed on the Indonesia Stock Exchange in 2017-2020. Sampling was carried out by purposive sampling which resulted in 73 companies with 4 years of observation (2017-2020).The type of data is secondary data obtained form of financial statement. Analysis of the data used is multiple regression analysis. The results of the study show that firstly, there are differences in the quality of the accruals of the sample companies before and during the covid-19 pandemic. secondly, there are differences in earnings persistence in sample companies before and during the Covid-19 pandemic which is supported by a decrease in earnings persistence, where the condition of profit persistence in sample companies before the Covid-19 pandemic is better and more stable than during the Covid-19 pandemic. The three value relevance comparisons seen from the Adjusted R2 value show a decrease from before the pandemic to during the Covid-19 pandemic.

Pengaruh Persistensi Laba, Ukuran Perusahaan Dan Alokasi Pajak Terhadap Pearnings Quality

The purpose of this study is to examine and analyze empirically Influence Persistence of Earnings (X1), Company Size (X2), Allocation Tax (X3) on the Earnings Quality (Y) in manufacturing companies listing on the Stock Exchange. This type of research is classified as research that is causative. The population of this research is manufacturing companies listed in Indonesia Stock Exchange (BEI) in 2019 until 2021. The sample was determined by purposive sampling method, to obtain a sample of 10 manufacturing companies. The data used in this research is secondary data. Data collected by using documentation obtained through the official website IDX: www.idx.co.id and obtained from the website: www.yahoofinace.com. Analysis of the data used is multiple regression analysis. The data obtained were then processed using descriptive statistics test, classic assumption test (Normality Test, Test Multicolinearity, Hesteroskedastisitas Test), Regression Test, Test The coefficient of determination, hypothesis test (F-test, t test) were analyzed with SPSS software elp.