The Effect of Book-Tax Conformity, Investment Opportunity Set, and Audit Quality on Earnings Response Coefficient

Abstract

The purpose of this study is to determine the impact of book-tax conformity, investment opportunity set, and audit quality to earnings response coefficient. This research is conducted on Indonesian manufacturing company listed in Indonesia Stock Exchange 2016-2018. The data of this research are obtained from the financial statements of the companies and analyzed using multiple linear regression method. The results of this study concluded that book-tax conformity, investment opportunity set, and audit quality have significant impact on earnings response coefficient. These results indicate that investor has consider the conformity between income tax and accounting report, market as well as book value of a company assets, and the quality of an audit that the company proceed.

The importance of liquidity to improve the quality earnings of company

“…Researches from Mulyati et al (2021) and Indriana and Handayani (2021) show that IOS has a positive effect on earnings quality. In contrast, studies from Putri (2021), Sabrina et al (2021), and Simamora, (2014) show that GCG does not moderate IOS on earnings quality. So, it can be assumed that GCG is able to moderate IOS on earnings quality; the hypothesis proposed is as follows.…”

“…The results of this study are supported by joint researchers from Arini (2022); Ningrum (2022); Mulyati et al (2021); Indriana and Handayani (2021) where GCG is able to moderate IOS on earnings quality. In contrast, research from Putri (2021); Sabrina et al (2021); Simamora (2014) affirmed that GCG does not moderate IOS on earnings quality.…”