The Accuracy of Earning Forecast Analysis, Information Asymmetry and Integrated Reporting – Case of Indonesia

Novita Indrawati

Abstract


The purpose of this study is to examine factors that affect companies presents the elements of integrated reporting in their annual reports and how its effect on the accuracy of earnings forecast analysis and information asymmetry. The independent variables tested were institutional ownership, company size, profitability, international activities, and industry type and growth opportunity. The study population is non-financial companies listed on the Indonesia Stock Exchange in 2015. The samples were taken by using purposive sampling i.e. with some specific criteria. The data was analysed by using multiple regression analysis to examine the factors affecting the company presents the elements of integrated reporting in the annual report, and a simple regression to see how the presentation of the elements of integrated reporting affect the asymmetry of information and the accuracy of earnings forecast analysis. This study found that only the size of the companies determines the presentation of the elements of
integrated reporting in the annual report. In addition, this study does not confirm the effect of the presentation of the elements of integrated reporting on the information asymmetry and the earnings forecast analysis accuracy.

Keywords


institutional ownership; company size; profitability; international activities; industry type; growth opportunity; integrated reporting; forecasts analysis; information asymmetry

Full Text:

PDF

References


Admati, A.R. andP. Pfleiderer. 2000. Forcing Firms to Talk: Financial Disclosure Regulation and Externalities.Review of Financial Studies, Society for Financial Studies. Vol. 13(3): 479-519.

Azam, S. M. Z., K. M. Warraich and S. H. Awan. 2011. One Report: Bringing Change in Corporate Reporting through integration of

Financial and Non-Financial Performance Disclosure. International Journal of Accounting and Financial Reporting. Vol. 1(1): 50-71.

Balakrishnan, K., Li., X. and Yang, H. 2012. Mandatory Financial Reporting and Voluntary Disclosure: Evidence from Mandatory IFRS Adoption. Working Paper Series.

Bassemir, M. 2012. Why Do Private Firms Adopt IFRS? Available at SSRN: https://ssrn.com/abstract=1896283 or http://dx.doi.org/10.2139/ssrn.1896283

Blouin, M.C. 2012. Does Other Information Improve The Usefulness of Management Earnings Forecasts for Analysts? Review of Accounting and Finance. Vol. 11 (1): 93-112.

Bushman, R and Smith, A.2001. Financial Accounting Information and Corporate Governance. Journal of Accounting and Economics. Vol. 32: 237-333.

Craswell, A. T. and S. L. Taylor. 1992. Discretionary Disclosure of Reserves by Oil and Gas Companies: An Economic Analysis. Journal of Business Finance & Accounting. Vol.19:295-308.

Cuijpers, R. and W. Buijink. 2005. Voluntary Adoption of non-local GAAP in the European Union: a Study of Determinants and Consequences. European Accounting Review. Vol.14(3): 487-524.

Choi, F.D.S. and G.G. Mueller. 1992. International Accounting. New Jersey:Prentice-Hall.

Dumontier, P. and B. Raffournier, 1998.Why Firms Comply Voluntarily with IAS: an Empirical Analysis with Swiss Data. Journal of International Financial Management and Accounting. Vol 9(3): 216–245.

Eccles, R.G., and M.P. Krzus. 2010. One Report. Integrated Reporting for a Sustainable Strategy. John Willey & Sons. Gassen, J., and T. Sellhorn, 2006, Applying IFRS in Germany-Determinants and

Consequences, BetriebswirtschaftlicheForschung und Praxis, Vol. 58 No. 4, pp. 365-386.

Hassan, O and Marston, C. 2010. Disclosure Measurement in the Empirical Accounting Literature: A Review Article. Economics and Finance Working PaperSeries. No 10-18. Brunel University.

Healy, P.M. and Palepu, K.G. 2001. Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure Literature. Journal of Accounting and Economics. Vol. 31: 405–440.

Hope, O-K. 2003. Disclosure Practices, Enforcement of Accounting Standards, and Analyst’ Forecast Accuracy: An International Study. Journal of Accounting Research. Vol.41(2): 235-272.

Hu, Y., Lin, T. W. and Li, S. 2008. An Examination of Factors Affecting Chinese Financial Analysts’ Information Comprehension, Analyzing Ability, and Job Quality. Review Quantitative Financial Accounting. Vol. 30: 397–417.

International Integrated Reporting Council. 2014. Assurance on An Exploration of Issues.

Kosaiyakanont, A. 2013. The Association between Corporate Disclosure, Analysts Following and Information Asymmetry: Evidence

from SET 100 Index. Global Review of Accounting and Finance . Vol. 4(1): 13 – 26.

Lang, M.H. and Lundholm, R.J. 1993. Cross sectional Determinants of Analyst Ratings of Corporate Disclosures. Journal of Accounting Research. Vol. 31(2): 246-271.

Lang, M.H. and Lundholm, R.J. 1996. Corporate Disclosure Policy and Analyst Behavior. The Accounting Review. Vol. 71(4): 467-492.

Jensen, M.C. and Meckling, W.H. 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics. Vol. 3(4): 305-360.

Myers, S.C. andN.S. Majluf. 1984. Corporate Financing and Investment Decisions when Firms Have Information That Investors Do Not Have. Journal of Financial Economics. Vol.13 (2): 187–221

Meek, G.K., Roberts, C.B. and Gray, S.J. 1995. Factors Influencing Voluntary Annual Report Disclosures by U.S., U.K. and Continental European Multinational Corporations. Journal of International

Business Studies. Vol. 26(3): 555-572.

Nuryatno, M., Nazir, N. dan Rahmayanti, M. 2007. Hubungan antara Pengungkapan, Informasi Asimetri dan Biaya Modal. Jurnal Informasi, Perpajakan, Akuntansi dan Keuangan Publik. Vol. 2(1): 9-26.

Oates, T. (2009). Jigsaw must be Complete. Integrated Reporting: Future Supplement, 1,12-15.

Oluwagbemiga, O. E., 2014. The Use of Voluntary Disclosure in Determining The Quality of Financial Statements: Evidence from The Nigeria Listed Companies. Serbian Journal of Management. Vol.9(2): 263 – 280.

Oyelere, P., Laswad, F., and Fisher, R. 2003. Determinants of Internet Financial Reporting by New Zealand Listed Companies. Journal of International Financial Management and Accounting. Vol. 14(1): 26-63.

Purwanti, M. and Kurniawan, A. 2013. The Effect of Earnings Management and Disclosure on Information Asymmetry. nternational Journal of Scientific & Technology Research. Vol. 2(8): 98-107.

Rasyid, E.R. 2014. Integrated Reporting is Also a Kind of Simulacrum. International Conference of Emerging Accounting Issues. Bandung.

Scott, W.R. 2009. Financial Accounting Theory. Fifth Edition. Pearson Prentice Hall. Toronto.

Sekaran, U. and Bougie, R. 2010. Research Methods for Business. A Skill Building Approach. Fifth Edition. John Willey & Sons Ltd.

Shroff, N., Sun, A.X., and White, H.D. 2013. Voluntary Disclosure and Information Asymmetry: Evidence from the 2005 Securities Offering Reform. Journal of Accounting Research. Vol.51(5): 1299-1345.

Sunariyah. 2004. Pengantar Pengetahuan Pasar Modal. Edisi Keempat. UMP AMP YKPN Yogyakarta.

Sutianto, F.D. 2013. 33 Kasus Pelanggaran Hukum di Pasaar Modal Terjadi selama 2013. www.detik.com

Suwardjono. 2008. Teori Akuntansi, Perekayasaan Pelaporan Keuangan. Edisi Ketiga. BPFE. Yogyakarta.

Tarca, A. 2004. International Convergence of Accounting Practices: Choosing between IAS and US GAAP. Journal of International Finacial Management and Accounting. Vol. 15(1):60-91.

Verrecchia, R.E. 1983. Discretionary Disclosure. Journal of Accounting and Economics. Vol.5(3): 179–194.

Von Alberti-Alhtaybat, L., Hutaibat, K. and Al- Htaybat. 2012. Mapping Corporate Disclosure Theories. Journal of Financial Reporting & Accounting. Vol. 10(1): 73-94.

Watts, R. L. and Zimmerman, J. L. 1978. Towards a Positive Theory of the Determination of Accounting Standards. The Accounting Review. Vol. LIII(1): 112–143.

White, A. L. 2010. Five Capitals of Integrated Reporting: Toward a Holistic Architecture for Corporate Disclosure. The landscape of Integrated reporting. Harvard Business School

White, M.J. 2013. The Path Forward on Disclosure. National Association of Corporate Directors-Leadership Conference.

Wu, J.S., and I. Zhang. 2009. The Adoption of Internationally Recognized Accounting Standards: Implications for The Credit

Markets. Working Paper, University of Rochester.




DOI: https://doi.org/10.24815/jdab.v4i1.5843

Article Metrics

Abstract view : 0 times
PDF - 0 times

Refbacks

  • There are currently no refbacks.


Published by:

Accounting Department collaborated with IAI KAPd (Institute of Indonesia Chartered Accountant)
Faculty of Business and Economics
Syiah Kuala University
Kopelma Darussalam, Banda Aceh, Indonesia - 23111
ISSN: 2355-9462, E-ISSN: 2528-1143

 

Creative Commons License
Jurnal Dinamika Akuntansi dan Bisnis by Prodi Akuntansi Universitas Syiah Kuala is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at http://www.jurnal.usk.ac.id/JDAB/index.