Earnings and Cash Flow Information on Its Value Relevance by The Book Value

Bawono, Andy Dwi Bayu; Ramadhanti, Mila; Kurniawati, Lintang

doi:10.23917/reaksi.v5i1.10679

Cited by 4 publications

(5 citation statements)

References 3 publications

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“…Thus, investors pay more attention to book value and less to earnings information in making investment decisions because of the perception of managerial bias in reported earnings. The research results of Bawono et al (2020) also demonstrated that earnings and cash flow affected stock returns, while book value was not proven to be a moderating variable.…”

Section: Introductionmentioning

confidence: 93%

Relevance of Earnings Value, Book Value, and Operating Cash Flow in Manufacturing Companies in Indonesia

Puspa

Nazaruddin

et al. 2022

JAI

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Research aims: This study examines the value relevance of accounting information consisting of earnings information, book values, and operating cash flows after Indonesia uses the full convergence of IFRS Financial Accounting Standards.Design/Methodology/Approach: The value relevance test was conducted using Ohlson's (1995) pricing model and Easton and Harris' (1991) return model. The valuation model test employed two regression equations, i.e., testing the relationship between earnings information and book value with stock prices and then testing the relationship between earnings information, book value, and cash flow with stock prices. In addition, the return model testing was performed to examine the relationship between earnings information and earnings changes with stock returns and the relationship between cash flow and cash flow changes with stock returns. The research sample was 105 manufacturing companies, with a research period from 2016 to 2019.Research findings: The test results with the pricing model approach revealed that earnings and cash flow had value relevance, while book value had no value relevance. This study’s results suggest that earnings and cash flow information are helpful for investors in making investment decisions. Moreover, the test results with the return model approach also uncovered those earnings, changes in earnings, and changes in operating cash flows had value relevance while operating cash flows, on the other hand, had no value relevance.Theoretical contribution/Originality: The utilized two models complement each other, and this study provides empirical evidence for standard setters who can renew beliefs about how much accounting information is reflected in stock prices in Indonesia, especially the manufacturing sector, after the full convergence of IFRS Financial Accounting Standards is applied.

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Section: Introductionmentioning

confidence: 93%

Relevance of Earnings Value, Book Value, and Operating Cash Flow in Manufacturing Companies in Indonesia

Puspa

Nazaruddin

et al. 2022

JAI

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show abstract

“…Terdapat beberapa penelitian terdahulu yang menginvestigasi hubungan antara arus kas dan laba terhadap return saham selama beberapa dekade terakhir (Bawono et al, 2020;Hung-Shu et al, 2015;Kasmiati dan Santosa, 2019;Rasyid dan Subekti, 2014;Kumar dan Krishnan, 2008). Ginting (2012) mengungkapkan bahwa informasi mengenai arus kas operasi dan laba berpengaruh terhadap return saham perusahaan.…”

Section: Pendahuluanunclassified

“…Contoh transaksi seperti itu meliputi penerbitan dan penarikan sekuritas ekuitas dan utang. Laporan arus kas sebenarnya dapat menjadi parameter yang baik untuk melihat kinerja keuangan perusahaan (Bawono et al, 2020), karena mengandung informasi mengenai aktivitas perusahaan tanpa adanya informasi akrual didalamnya. Namun demikian berdasarkan hasil regresi yang telah dilakukan menunjukkan bahwa informasi arus kas tidak memiliki nilai relevansi bagi para investor di Indonesia.…”

Section: Pembahasanunclassified

“…Dari pengujian yang telah dilakukan, secara konsisten menemukan bahwa investor lebih melihat informasi yang terkandung dalam laba akrual dibandingkan arus kas perusahaan. Hal ini sejalan dengan penelitian Bawono et al (2020), Ginting (2012), dan Sloan (1996) yang mengungkapkan bahwa laba akrual mengandung informasi mengenai kinerja perusahaan, sehingga investor yang naif lebih memilih untuk menggunakan informasi laba akrual dibandingkan arus kas. Namun demikian, kandungan dalam laba akrual berpotensi mengandung unsur diskresi akrual yang dilakukan oleh manajemen perusahaan dibandingkan komponen arus kas.…”

Section: Simpulanunclassified

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Reaksi Investor Atas Relevansi Informasi Arus Kas Dan Laba Akrual pada Laporan Keuangan Perusahaan

Sundarta

Azis

Dewi

2021

JIUBJ

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This study aims to determine whether cash flows and accrual earnings affect on stock returns that contained information about investors reaction in manufacturing industries on the Indonesia Stock Exchange from the 2013-2017 period. This research is a quantitative study using secondary data in the form of financial reports. The data analysis technique used is multiple regression analysis. The results of this study indicate that the cash flow statement has no effect on stock returns, while accrual earnings have a positive effect on stock returns. This finding can be one of the additional literature in the field of financial accounting because investors see the earnings information contained in the income statement compared to the cash flow statement that is reflected in stock returns.

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“…There are three types of valuation related to stocks: book value, market value, and intrinsic value. According to the issuer's books, book value is the value of shares (Bawono et al, 2020). Market value is the book value of shares in the stock market, and intrinsic value is the actual value of shares (Desfiandi and Marantika, 2016).…”

Section: Introductionmentioning

confidence: 99%

Reviewing the Firm Value in terms of Profit, Debt, and Growth

Wahyuni

Gani

2022

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This study aims to examine the effect of Return on Equity (ROE), Return on Assets (ROA), Non-Profit Margin (NPM), DER (Debt to Asset Ratio), Debt to Asset Ratio (DAR), Asset Growth, and Market To Book Value of Equity (MBVE) to Price Book Value (PBV). The population in this study is the consumer goods sub-sector manufacturing companies listed on the Indonesia Stock Exchange in the observation period from 2019 to 2021. There are 42 companies. The total sample in this study is 33 financial statement data, which was determined based on the purposive sampling method. The data were analyzed using the Ordinary Least Square model using the Eviews Version 12 software. The results found that ROE, ROA, Asset Growth, and Market To Book Value of Equity (MBVE) positively and significantly affected firm value. Meanwhile, DER (Debt to Equity Ratio) has a negative and significant effect on firm value. Meanwhile, DAR has no significant adverse effect on firm value.

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Earnings and Cash Flow Information on Its Value Relevance by The Book Value

Cited by 4 publications

References 3 publications

Relevance of Earnings Value, Book Value, and Operating Cash Flow in Manufacturing Companies in Indonesia

Relevance of Earnings Value, Book Value, and Operating Cash Flow in Manufacturing Companies in Indonesia

Reaksi Investor Atas Relevansi Informasi Arus Kas Dan Laba Akrual pada Laporan Keuangan Perusahaan

Reviewing the Firm Value in terms of Profit, Debt, and Growth

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