GOOD CORPORATE GOVERNANCE, CONSERVATISM ACCOUNTING, REAL

EARNINGS MANAGEMENT, AND INFORMATION ASYMMETRY ON SHARE

RETURN

Sugiyanto
Accounting Department Pamulang University
*Email : [email protected]
Alexander Candra
Program Pascasarjana Sekolah Tinggi Agama Budha Jakarta
*Email: [email protected]
Abstract
This study aims to analyze the influence of accounting conservatism, real earnings
management, and information asymmetry on stock returns. This study uses the sample of
all manufacturing companies listed on the Indonesia Stock Exchange during the period
2013 to 2015. The total number of companies used as sample research is 44 companies
with observations for three years. Pursuant to purposive sampling method, total of
research sample is 132 financial reports and annual reports. The results of this study
indicate: (1) Good corporate governance has a significant negative effect on stock return
with a significance value of 0.002<0.050; (2) Conservatism with accrual-based
conservatism proxy has a significant negative effect on stock return with a significance
value of 0.032 <0.050; (3) Real earnings management with the proxy of discretionary
cash flow has no effect on stock return with a significance value of 0.050; and (4)
Information asymmetry with proxy of bid-ask spread has no effect on stock return with
significance value of 0.453> 0.05.

Keywords: Good Corporate Governance, Conservatism, Real Earnings Management,

Information Asymmetry, Stock Return

INTRODUCTION by some accountants, and lack of

Company performance is a picture of understanding in the capital market.
the results or achievements that are The phenomenon in this study is due to
influenced by operational activities in an decreased public opinion, trust and
effort to utilize the resources owned public assessment of the company's
company during a certain period of performance, especially companies that
time. In this study, the company's are in the capital market because of the
performance measure used is stock lack of satisfaction of public opinion to
returns. Basic consideration of the investors, issuers, securities, and also
selection of stock return sizes that analysts.
shareholders have the motivation to Information on company
invest in the hope of obtaining a return performance can be influenced by
in accordance with the embedded factors such as Kazemi's conservatism,
capital. Dechow, P.M, Skinner real earnings Commented [m1]: Tidak ada di Referensi
Often the occurrence of several cases management (2000). This is because
of accounting scandals that occur in the management can choose and change
country, caused by cases of violations accounting policies, accounting
estimates, and error corrections to burden and debt is not too low so that
improve the relevance and reliability of the financial statements presented have
the entity's financial statements. They high quality financial information and
also can compare the financial will further affect company value, (2)
statements over time, and compare the real earnings management, and
entity's financial statements with other information asymmetry also affect
companies. company value.
Good corporate governance is a
system of checks and balances, both Information Asymmetry Theory
internal and external that ensures the Akerlof (1970) introduced the theory
company performs accountability to all of information asymmetry through "The
stakeholders, and is socially responsible
market for lemons". Akerlof connects
in its business activities. Corporate
quality and uncertainty and develops
governance, from a narrow point of
information asymmetry ideas or ideas
view, is defined as the relationship
by providing examples of used car
between the company and its
shareholders (Solomon, 2014). markets. The reason of this research is
Based on existing practices, often the using information asymmetry theory
user's attention to financial statements because information asymmetry will
is only directed to earnings information, affect (1) stock price that occurs in
regardless of how and where the market influenced by information factor
earnings are generated. Management as and (2) existence of government policy
the manager of the company has the affecting business environment.
obligation to provide information about
the condition of the company to Signaling Theory
shareholders, but in this case the Ross (1977) associates the theory of
information submitted sometimes is not signal with the problem of asymmetry
in accordance with the actual company information between management and
conditions. investors, regarding the structure of the
firm’s capital are determined by the
LITERATURE REVIEW incentive signal of the firm's
management. Management with
Company Value Theory information advantage has an incentive
Duran (1952) Cost of the Debt and to signal personal information through Commented [m2]: Lengkapi di referensi
Equity Funds for Bussiness, the value of its debt-rate options.
the Firm theory associated with the The reason this research uses signal
theory of financial structure. The theory is that every corporate action
company value theory views the firm as made by the company gives meaning to
a set of contracts between many outsiders. The meaning given by the
parties, where the company's financial information is known as a signal, this
structure has a considerable influence can be a positive signal or a negative
on firm value. signal, followed by a market reaction. If
This study uses the theory of the signal is positive, the market reacts
corporate value with the consideration so as to increase the stock price which
that (1) conservatism is a prudent further affects the company's
concept to keep the profit and assets performance. Furthermore, the increase
not expressed too high and the stated in stock value reflects the improvement
of company performance, in this case governance is considered as one of the
stock returns, return on equity, and foundations of corporate governance to
earnings per share will increase. its ability to prepare companies with
Variables that affect the signal are the proper guidance, self-regulation, and
quality of information provided by the open access to investment capital
company (Manurung, 2012). through its activities. The Forum Commented [m3]: Tidaka ada di referensi
Corporate Governance in Indonesia
Agency Theory (FCGI) defines corporate governance as
The agency theory was introduced by a set of rules that establishes
Jansen, M.C and Meckling W.H (1976). relationships between shareholders, Commented [m4]: Lengkapi di referensi
The idea of this theory is the separation managers, creditor, government,
of ownership and control of the firm. employees, and other internal and
The agency theory states that there is an external interest holders in relation to
agency relationship as a contract their rights and obligations, or in words
between management as an agent with another system that directs and controls
the owner as the company principal. the company.
The working relationship between the
parties giving the authority (principal) Conservatism
that is the shareholder with the party Traditionally, accounting
who receives the authority (agent) that conservatism is defined as "anticipate
is management, in the form of a no profit, but anticipate all losses" Bliss
cooperation contract called "Nexus of (1924) in Watt (2003). Anticipating no
Contract". profit means not recognizing profits
This research uses agency theory before there is valid verification of
with the consideration that (1) seen claims to revenue generating profits.
from funding source, external funding This means conservatism is in the
of company comes from debt and stock, extreme form of not recognizing profits,
and (2) seen from organizational theory but acknowledging any losses even
there are three strongly related parties though they have not been realized. So
in company, that is agent as manager, profits will only be recognized upon
investor as the lender and the owner as realization until there is a legitimate
a capital or fund-raiser to the company. claim to such profits.
The issue that arises in relation to the
agent is the problem between the agent Real Eanings Management
and the investor and the agent with the Cohen, D.A and Zarowin P. (2010)
owner. In this case the management define real earnings management as a
who manage the company as an agent change of time or the structure of a real
plays a role in determining the business transaction to change profits,
company's performance. where real transaction changes deviate
from optimal activity plans and impose
real costs for the firm.
Good Corporate Governance According to Roychowdhury (2006)
Good corporate governance is the earnings management through real
pillars of corporate governance with the activity is a deviation from the normal
environment of stakeholders' capital operating activities of a company that is
and human capital. Corporate motivated by management's desire to
provide a false understanding to relationship between the company and
stakeholders that certain financial its stakeholders.
reporting objectives have been achieved Return of shares is a return from
through the company's normal shares and the results of the broker or
operating activity. According to Gunny company to investors who have
(2010) real earnings management is an invested in the company. In the world of
action performed by management to the stock market, an investor who
change the time or structure of invests by buying a stock must be
transactions of operations, investments confident with all the risks and
and / or financing in an attempt to uncertainties that will be obtained in
influence the output of the accounting the future. Because, the game of stock
system. market is a bit much to rely on luck,
Based on the above definitions, it can although there are ways that technical
be concluded that real earnings techniques can be used by investors to
management is a deliberate get the best results.
management action by changing the
time or structuring transactions DATA AND RESEARCH TECHNIQUE
operations, investments, or financing ANALYSIS
with the aim to declare profit is not real. Population and Sample Research
The population in the study is 182
Information Asymmetry manufacturing companies. This study
Information asymmetry is a uses the sample of all manufacturing
condition where one party has better companies listed on the Indonesia Stock
information than the other. In a Exchange during the period 2013 to
corporate context, managers have 2015. The total number of companies
used as sample research is 44
better information about the company's
companies with the period of
condition than investors who are not
observations about three years.
involved in management. Information
In this research the technique is
asymmetry will raise an adverse
using analysis model of Dechow and
selection problem because investors do Skinner (2000) for the accrual and profit
not know for sure which companies are management model. The population
good and which are bad. used in this study is a listed
manufacturing sector company which
Stock returns published its annual report on Indonesia
Company performance is a whole Stock Exchange (IDX) from the period
and comprehensive picture of the 2013 to 2015. Meanwhile, sampling in
results or achievements that are this research used non probability
influenced by the operational activities sampling method with purposive
in exploiting resources owned by the sampling technique.
company during a certain period of Data obtained from www.idx.co.id in
time. In other words, the company's the form of annual reports and
performance is the level of achievement corporate financial statements. Stock
of results in order to realize the return data, and bid-ask spreads for
company's goals. Measuring company Indonesia are obtained from
performance is important in the finance.yahoo.com. The composite
share price index data for Indonesia is obtained from website www.idx.go.id.

Table 1
Operational Variables of Measurement
Variable Measurement Scale Referents
Good corporate governance is measured using
disclosure method or content analysis based on
five principles and concept (concept) using
dichotomy that is score 1 (one) if yes do, and Ross A and Commented [m5]: Tidaka ada di rerferensi
Good score 0 (zero) if not do with total maximum Crossn. K (2012)
Corporate percentage of weight of score is 100%. The Rati ASEAN capital
Governance number of weighting scores is calculated by the o market forum
( X1 ) formula: value 1: express disclosure value 0: (ACMF.2014)
states not disclose ASEAN capital market forum
(ACMF), ASEAN corporate governance scorecard
n x 100%. K Where: GCG: ASEAN corporate
governance scorecard indeks.
Lee and T.J Commented [m6]: Lengkapi di refer
Conservatism Accrual = Rati
Wong Commented [m7R6]: ensi
( X2 ) o
CONACCit = (2010)
Real
Earnings
Rati Roychouwdhury
Managemen
Cash flow discretionary = o (2006)
t
( X3 )
Information
Rati Callahan et al
Asymmetry
Spread = o (1997)
( X4 )
Stock
Rati Hartono
Return
Stock return = o (2013) Commented [m8]: tidak ada di referensi
(Y)

STOCK RETURN = α0 + β1GCG + β2CONSERVATISM + β3REAL EARNING

MANAGEMENT + β4INFORMATION ASYMMETRY + et........................................(3.1)

In this research the data is collected annual reports (annual report), and
by means of documentary collection, corporate financial statements Stock
i.e. the use of data derived from existing return.
documents. This is done by tracking and
recording the necessary information on
secondary data in the form of financial RESULT AND DISCUSSION
statements and annual reports of
Descriptive Statistic
sample companies. Other supporting
Descriptive analysis is a method in
data were obtained by using literature
which all data related to the study are
study from scientific journals and
collected and grouped for analysis and
literature containing the discussion
interpretation objectively by comparing
related to this research. Data obtained
the minimum, maximum and average
from www.idx.co.id in the form of
values of the sample.
 Table 1 : Descriptive Statistics
Std.
N Minimum Maximum Mean Deviation
GCG 132 -,88300 ,74530 -,0478826 ,34736481
KON 132 -,98300 ,64530 -,1478826 ,24736481
REM 132 -,37930 ,63820 ,0800780 ,12693781
IA 132 -,52630 2,00000 ,0820258 ,31287747
RETURN 132 -,00890 ,00750 -,0007402 ,00252378
Valid N (listwise) 132

Source : Self Proceed

the normality of data that is by graph

Normality test
Normality test is performed to analysis and statistical test. To test the
determine whether the data is normally normality of data in this study using
distributed or not. Because a good histogram graph analysis and normal
regression model has normal data plot graph and using statistical test by
distribution. There are 2 ways to detect using Kolmogorov-Smirnov (K-S) test.

Figure 1 : Test Normalitas Histogram Normal

Figure 2 : Test Normalitas Grafik Normal Plot

 the tolerance value > 0.1 and VIF < 10,
Multicollinearity Test
then it can be said there is no
Multicollinearity test is performed to multicollinearity between independent
see if there is correlation between variables.
independent variables or each other. If

Table 2 : Multicollinearity Test Coefficientsa

Collinearity Statistics
Model Tolerance VIF
1 (Constant)
GCG ,999 1,001
KON ,999 1,001
REM ,999 1,001
IA ,999 1,001
a. Dependent Variable: RETURN
Source : Self Proceed

One measure in determining whether or

Autocorrelation Test
not there is autocorrelation is to use the
Ghozali (2013), the autocorrelation Durbin-Watson (DW) test. The Durbin
test aims to test whether in a linear Watson value between du and 4-du
regression model there is a correlation shows the model not affected by the
between the confounding errors in autocorrelation problem.
period t with the error of intruder in
period t with error period t-1 (previous).

Table 3 : Auto correlation Test

Adjusted Std. Error of Durbin-
Model R R Square R Square the Estimate Watson
1 ,256a ,065 ,043 ,00246828 1,839
a. Predictors: (Constant), IA, REM, KON, GCG
b. Dependent Variable: RETURN
Source : Self Proceed

detect whether or not

Heteroscedasticity Test
heteroscedasticity is to see the
The heteroscedasticity test was scatterplot graph between the predicted
performed to test whether in the value of the dependent variable is
regression model there was a variance ZPRED with residual SRESID.
inequality of the residual one
observation to the other. One way to
 Figure 3 : Heteroscedasticity Test Scatterplot Grafik

Source : Self Proceed

Hypothesis Test Results Individual Parameter Significance Test

Hypothesis testing in this study was (Test Statistic t)
conducted by using multiple regression Partial test or t test is used to show
analysis models. According to Ghozali how far the influence of one
(2015) multiple regressions is used to independent variable individually in
strengthen more than one explaining the variation of the
independent variable to one variable. dependent variable tested at the 0.05
In this research, the experiment is significance level. The t test results are
done by testing the significance of shown in Table 4.
individual parameters (t test statistic).

Table 4
Statistical Test Results t Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -,001 ,000 ,000 -4,554 ,000
GCG -,002 ,001 -,285 -3,167 ,002
KON -,002 ,001 -,185 -2,167 ,032
REM ,003 ,002 ,169 1,977 ,050
IA ,001 ,001 ,064 ,753 ,453
a. Dependent Variable: RETURN
Source : Self Proceed

CONCLUSION previous section, it can be deduced with

Based on the results of testing the based on the test results with SPSS 24
discussion as has been presented in the that good corporate governance variable
(X1) has a negative effect on stock return
H1. Accounting conservatism variable Callahan, C.M., Lee, C.M., Yohn, T.L.
(X2) has a negative effect on stock return (1997), Accounting Information
so H2 accepted. Variable real earnings and Bid Ask Spreads. Accounting
management (X3) does not affect the Horizons, 11(4), 50-60.
stock return so that H3 is rejected. Cohen, D.A. and Zarowi, P. 2010 Accrual
Variable information asymmetry (X4) has Based and Real Earnings
no effect on stock return so H4 is Management Activities around
rejected. Sesasonal Equity Offering, Journal
of Accounting and Economics Vol.
Limitations 50, PP 2-19.
The research has some limitations: Dechow, P.M., Kothari, S., Watts, R.L.
(1998), The Relation between
1. This research has limited resources
Earnings and Cash Flows. Journal of
and research information, in
Accounting and Economics, 25(2),
addition to the amount of data
133-168.
collected is not maximal due to
Dechow, P.M., Skinner, D.J. (2000),
limited use only financial
Management: Reconciling the
statements of manufacturing
Views of Accounting Academics,
companies that are listed on the
Practitioners, and Regulators.
Indonesia Stock Exchange. So the
Accounting Horizons, 14, 232-250.
results of limited research
Duran, D. (1952) Cost of Debt and
generalization. The suggestion for
Equity Fund For Bussiness: Treand
further research is to expand the
and Problems of Measurement
sample of companies by industry.
Conference on Research in
2. This study uses only manufacturing
Business Finance. PP 212-265.
companies only. Subsequent
Ghozali, I. “Teori Akuntansi”,
research can use company samples
Semaranag: Badan Penerbit
for all industries, except for the
Universitas Diponogero, 2015.
financial industry because it has
Good Corporate Governance perspektif
different characteristics.
Manjemen Stratrgik www.iicg.org
3. This study calculates stock return ASEAN Capital Market Forum
without considering risk. Therefore (ACMF) 2014
it is necessary to calculate the stock Gunny, K.A. (2010), The Relation
return by using the risk adjusted between Earnings Management
return measure, so the estimation Using Real Activities Manipulation
result is expected to be more and Future Performance: Evidence
precise. from Meeting Earnings
Benchmarks. Contemporary
Accounting Research, 27(3), 855-
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