Income smoothing and firm value in a regulated market: the moderating effect of market risk

Abstract

PurposeThis study aims to examine the impact of income smoothing on the value of firms in a regulated security market, moderated by market risk. This is based on the prevalence of accounting scandals resulting in the collapse of firms which has been attributed to the opportunistic behaviors of managers.Design/methodology/approachThe ex post facto research design was employed, and as such, data were gathered from secondary sources. The quantitative approach was also used in the study. Furthermore, the system generalized method of moments (Blundell–Bond) panel estimation technique was used for analyzing the data. Income smoothing was measured using the accrual based methods, while firm value was measured using share price.FindingsThe study found that income smoothing has a negative significant impact on firm value. The study also revealed that market risk is a significant variable that defines the relationship between income smoothing and firm value.Originality/valueTesting the moderating effect of market risk on the relationship between income smoothing and firm value is unique to this study, particularly from a regulated security market and emerging economy.

Pengaruh Perataan Laba Dan Struktur Modal Terhadap Nilai Perusahaan Dengan Risiko Pasar Sebagai Variabel Moderasi

“…Praktik perataan laba adalah salah satu bentuk dari manajemen laba yang dilakukan manajemen untuk menjaga agar tidak terjadi perubahan laba perusahaan. (Abogun et al, 2021). Perataan laba adalah upaya yang disengaja untuk meminimalkan fluktuasi laba.…”

“…Manajemen menggunakan perataan laba,yang disebut sebagai tindakan logis dan rasional, untuk dapat memastikan laba yang stabil, mengurangi fluktuasi yang dilaporkan, dan meningkatkan kemampuan investor untuk memprediksi arus kas masa depan. Penelitian yang dilakukan oleh Abogun et al (2021), Saifaddin (2020), dan Sinurat et al (2018) menyatakan bahwa perataan laba berpengaruh negatif terhadap nilai perusahaan.…”

“…Perubahan faktor pasar menjadi penyebab pergeseran harga tersebut. Volatilitas di pasar menggambarkan konsep risiko pasar (Abogun et al, 2021).…”

The Effect of Big Data on Firm Value: The Mediation Roles of Innovation and Financial Performances

“…Success of firm's managers (Majid et al, 2022); (Nurhayati et al, 2021); (Effendi, 2021); (Zuhroh, 2019); (Setiadharma & Machali, 2017); (Sucuahi & Cambarihan, 2016) Firm's stock prices (Majid et al, 2022); (Nafasati & Hilal, 2021); (Effendi, 2021;Zuhroh, 2019); (Oktarina, 2018); (Iswajuni et al, 2018); (Susanti & Restiana, 2018); (Agustina & Baroroh, 2016); (Nyerges, 1992) Firm's assets owned (Bahri et al, 2022); (Nurhayati et al, 2021); (Komara et al, 2020) Firm's share price (Bahri et al, 2022); (Abogun et al, 2021); (Komara et al, 2020) Firm's cash flows (Suriawinata & Nurmalita, 2022); (Salvi et al, 2021); (Rubera & Kirca, 2017); (Nyerges, 1992) Value of firm's equity (Suriawinata & Nurmalita, 2022); (Salvi et al, 2021); (Gautam, 2021) Firm's return on assets (Nurhayati et al, 2021); (Gautam, 2021); (Komara et al, 2020) Firm's growth (Nurhayati et al, 2021); (Dewi et al, 2021); (Varaiya et al, 1987) Firm's capital structure (Nurhayati et al, 2021); (Setiadharma & Machali, 2017) Big Data Big data technologies, according to Gantz and Reinsel (2011), are a new generation of technologies and architectures created to extract economic value from very large volumes of diverse data through high-velocity data gathering, discovery, and/or analysis. Big data refers to datasets that are too large for standard database software tools to effectively acquire, store, manage, and analyze…”

Level of usage of income smoothing as a creative accounting tool by Balkan banks

“…Alexandri and Anjani (2014) found that important factors that affect income smoothing are bank size, profitability and financial leverage. Abogun et al (2021) showed that IS have an important non-positive impact on the firm's value. The findings also emphasized that market risk is an important variable that determines the relationship between IS and firm worth.…”