Market reaction on income smoothing in the Indonesian manufacturing industry

Iwan Setiadi; S. Purnamasari; Erna Setiany

doi:10.1504/IJMEF.2015.070783

Market reaction on income smoothing in the Indonesian manufacturing industry

Iwan Setiadi, S. Purnamasari, Erna Setiany^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

Abstract

The capital market reactions are proxied by cumulative abnormal return (CAR) and stock trading volume (STV) activity, while for the earnings information the proxy of unexpected earnings was used. This research used independent samples tests. The result shows that when measured by CAR, the market does not show any different reaction, but when measured by STV, the market reactions of the income smoothing group are significantly different from those of the non-income smoothing group. Then the sample were split into two group of positive earnings surprise and negative earnings surprise. The positive earnings surprise group shows no different market reaction when measured by CAR, but show different market reaction when measured by STV. The negative earnings surprise group shows no different market reaction when measured by CAR and STV.

Original language	English
Pages (from-to)	202-212
Number of pages	11
Journal	International Journal of Monetary Economics and Finance
Volume	8
Issue number	2
DOIs	https://doi.org/10.1504/IJMEF.2015.070783
Publication status	Published - 2015
Externally published	Yes

Keywords

Abnormal return
Income smoothing
Market reaction
Stock trading volume activity
Unexpected earnings

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title = "Market reaction on income smoothing in the Indonesian manufacturing industry",

abstract = "The capital market reactions are proxied by cumulative abnormal return (CAR) and stock trading volume (STV) activity, while for the earnings information the proxy of unexpected earnings was used. This research used independent samples tests. The result shows that when measured by CAR, the market does not show any different reaction, but when measured by STV, the market reactions of the income smoothing group are significantly different from those of the non-income smoothing group. Then the sample were split into two group of positive earnings surprise and negative earnings surprise. The positive earnings surprise group shows no different market reaction when measured by CAR, but show different market reaction when measured by STV. The negative earnings surprise group shows no different market reaction when measured by CAR and STV.",

keywords = "Abnormal return, Income smoothing, Market reaction, Stock trading volume activity, Unexpected earnings",

author = "Iwan Setiadi and S. Purnamasari and Erna Setiany",

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year = "2015",

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T1 - Market reaction on income smoothing in the Indonesian manufacturing industry

AU - Setiadi, Iwan

AU - Purnamasari, S.

AU - Setiany, Erna

PY - 2015

Y1 - 2015

N2 - The capital market reactions are proxied by cumulative abnormal return (CAR) and stock trading volume (STV) activity, while for the earnings information the proxy of unexpected earnings was used. This research used independent samples tests. The result shows that when measured by CAR, the market does not show any different reaction, but when measured by STV, the market reactions of the income smoothing group are significantly different from those of the non-income smoothing group. Then the sample were split into two group of positive earnings surprise and negative earnings surprise. The positive earnings surprise group shows no different market reaction when measured by CAR, but show different market reaction when measured by STV. The negative earnings surprise group shows no different market reaction when measured by CAR and STV.

AB - The capital market reactions are proxied by cumulative abnormal return (CAR) and stock trading volume (STV) activity, while for the earnings information the proxy of unexpected earnings was used. This research used independent samples tests. The result shows that when measured by CAR, the market does not show any different reaction, but when measured by STV, the market reactions of the income smoothing group are significantly different from those of the non-income smoothing group. Then the sample were split into two group of positive earnings surprise and negative earnings surprise. The positive earnings surprise group shows no different market reaction when measured by CAR, but show different market reaction when measured by STV. The negative earnings surprise group shows no different market reaction when measured by CAR and STV.

KW - Abnormal return

KW - Income smoothing

KW - Market reaction

KW - Stock trading volume activity

KW - Unexpected earnings

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JO - International Journal of Monetary Economics and Finance

JF - International Journal of Monetary Economics and Finance

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Market reaction on income smoothing in the Indonesian manufacturing industry

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Keywords

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