This study investigates the predictive power of aggregate corporate earnings and their four components for future GDP growths. It splits aggregate earnings into operating and non-operating incomes as they have different degrees of permanence. It also splits aggregate earnings into operating cash flows and accruals since earnings management affects them distinctively. This study finds aggregate earnings, operating income, operating cash flows, and accruals as predictors for oneand two-years-ahead GDP growths. However, it does not find such predictive power for aggregate non-operating income. Furthermore, this study splits the research sample based on macroeconomic development level and documents how aggregate earnings have predictive power over the longer horizon in developed countries, while aggregate non-operating income is a good predictor only in developing countries. Meanwhile, when splitting the sample based on earnings quality degree, this study demonstrates that the predictive power of aggregate accruals in a high earnings quality subsample is higher than in the low one. In the context of high (low) earnings quality, the predictive power of aggregate accruals is higher (lower) than that of operating cash flows. Overall, besides supporting previous studies' findings, this study also discovers that corporate earnings components are excellent predictors for future GDP growths. JEL Classification: M21, O16, P44

Objective: The purpose of this study is to investigate the pattern of earnings management on growth and value companies in Indonesia. This study predicts that earnings management has information contents. Therefore, earnings management tends to degrade the quality of earnings, then affect the future profitability. This study analyzes the effect of earnings management information content to the company's future profitability. This study provides an understanding about accounting information at certain market price levels for growth and value companies. Findings: Findings of this study indicate the differences between earnings management influence on growth and value companies. The results also support the differences of relative incremental information content of earnings management on growth and value companies. The growth firms tend to do earnings management and have higher profitability compared to the value firms. The implication is that the incremental information content of earnings management on growth firms is lower than those of the value firms to predict future profitability.   Implication: The contribution of this research is to provide an in-depth review on earnings management study associated with company life cycle (growth and value), as well as  to give additional understanding about the existence of incremental information content of earnings management. Thus, firms show different earnings management behaviors and ultimately those behaviors affect the quality of profit to predict future earnings

This study develops a new return model with respect to accounting fundamentals. The new return model is based on Chen and Zhang (2007). This study takes into account theinvestment scalability information. Specifically, this study splitsthe scale of firm’s operations into short-run and long-runinvestment scalabilities. We document that five accounting fun-damentals explain the variation of annual stock return. Thefactors, comprised book value, earnings yield, short-run andlong-run investment scalabilities, and growth opportunities, co associate positively with stock price. The remaining factor,which is the pure interest rate, is negatively related to annualstock return. This study finds that inducing short-run and long-run investment scalabilities into the model could improve the degree of association. In other words, they have value rel-evance. Finally, this study suggests that basic trading strategieswill improve if investors revert to the accounting fundamentals.Keywords: accounting fundamentals; book value; earnings yield; growth opportuni­ties; short­run and long­run investment scalabilities; trading strategy;value relevance

This study examines the influence of client preference with respect to information search behavior and subsequent tax recommendation. Prior studies have identified that tax consultants exhibit confirmation bias in their information search processes, which is explained by the theory of motivated reasoning (Kunda, 1990). However, that theory does not take into consideration responses of tax consultant that are attributable to the way clients present their preferences. This study fills the gap by proposing a social norm activation model which can help to foster a better understanding of the nature of the confirmatory behavior. To accomplish this purpose, study participants role-played as advisors on a tax compliance task. The experiment used aweb-based instrument that involved 82 tax professionals. Results showed that tax consultants engaged inlower confirmation bias when they received an explicitly preference statement from their client than those who received an implicit statement. Furthermore, the former tax consultants recommended a more conservative tax position than the latter. These findings underscore the importance of social norm in a professional tax work environment. As a practical contribution, these findings suggest that the beliefs and norms of tax professionals influence the way they do their work.

Local governments’ financial statements that obtain unqualified opinion until the end of 2011 were still relatively few in number. This study aims to empirically examine the effect on the audit results of the financial statements of local governments in Indonesia of the budgets’ proportion, the effectiveness of the internal audit, the follow-up to the Supreme Audit Board’s findings, the Supreme Audit Board’s opinions from earlier periods, and the competence of the available human resources to understand the audit results of the Supreme Audit Board. Budget management has become very important since it lays out a detailed plan for the expenditure and revenue of the local governments, so that it can be accountable to the public. This study used a sample of 434 Indonesian Local Governments’ financial statements of 2011 and a logistic regression analysis. This study used primary and secondary data to uncover the phenomena that the local governments’ financial statements which received an unqualified opinion from the Supreme Audit Board were still relatively few in number. The results of this study showed that the budgets’ proportions of local governments are negatively significant in affecting the audit results of the financial statements of the local governments. The Supreme Audit Board’s opinions from earlier periods positively influenced the audit results of the financial statements of local governments. Whereas the variables of the effectiveness of internal controls, the follow-up to the Supreme Audit Boards’ findings, and the competence of the human resources do not significantly influence the audit results of the financial statements of local governments. The results of this study can contribute both theoretically and practically to the quality of the local governments’ financial statements. Keywords: budgets’ proportion, human resources, competency, opinions, audit quality.