Open AccessEarnings Quality, Asymmetric Information, and Market Response : Insights from Indonesia
Author(s) -
Puji Wibowo,
Etty Murwaningsari
Publication year - 2020
Publication title -
international journal of scientific research in science and technology
Language(s) - English
Resource type - Journals
eISSN - 2395-602X
pISSN - 2395-6011
DOI - 10.32628/ijsrst207663
Subject(s) - stock exchange , business , earnings , financial statement , information asymmetry , earnings per share , nonprobability sampling , corporate governance , information quality , stock market , database transaction , econometrics , monetary economics , accounting , financial economics , economics , finance , information system , computer science , paleontology , population , demography , audit , horse , sociology , electrical engineering , biology , programming language , engineering
This study aims to investigate the impact of earnings quality and asymmetric information on market reaction which is proxied by cumulative abnormal return (CAR). This study also attempts to analyze whether good governance is playing an important role in moderating the effects of those two independent variables on CAR. By using purposive sampling method, this study covers 125 manufacturing companies listed on Indonesian Stock Exchange for 2017-2018 period to reveal above agenda. By using generalize least square (GLS) fixed effect model, it is found that reported earnings on financial statement have meaningful information for investors. By this, investors could expect stock return by relying on this earning information. Meanwhile, asymmetric information also matters for investors to make decisions regarding stock transaction. However, independence commissioner which is predicted to have an important role for stock performance, is not proved as moderating variable in this study.