The Effect Of Accrual Reliability, Debt Level And Cash Flow Volatility On Earnings Persistence

Abstract

This research is entitled “The Effect of Accrual Reliability, Debt Level and Cash Flow Volatility on Earnings Persistence”. The research question is “Is the persistence of earnings is affected by accrual reliability, debt levels and cash flow volatility? The research objective is to examine empirically the effect of accrual reliability, debt levels and cash flow volatility on the earnings persistence. Accrual reliability, level of debt and cash flow volatility are independent variables in this study while earnings persistence is the dependent variable. This study used secondary data in the form of annual financial statements of sample companies, namely basic industry and chemicals sector companies listed on the Indonesia Stock Exchange for the period 2014-2018. The sample selection method used was purposive sampling method. In total, there were two 12 sample companies in this study. This study used multiple linear regression data analysis technique including classical assumption test, F-statistical test and hypothesis testing. The results showed the accrual reliability and cash flow volatility had no effect on earnings persistence, while the level of debt had a positive effect on earnings persistence, and therefore, the second hypothesis is acceptable.

Determinants Of Earning Persistence In Consumer Cyclicals Sector In Indonesia

“…The results of this study show that Leverage (Lv) has no effect on Earning Persistence (EP). These results are supported by the research of Widiatmoko and Indarti (2019) but not supported by the research of Dayanti et al (2021). As is the case with other independent variables, the cause of Lv has no effect on EP because during the study period there was a period when the Covid-19 Pandemic occurred, which was 3 years out of the 5 years accounting period in this study.…”

“…Nevertheless, not all studies show the influence of leverage on earnings persistence. According to the research by Dayanti et al (2021), leverage has a positive impact on profit persistence, but research by Widiatmoko and Indarti (2019) found leverage has a negative impact on profit persistence. Thus, the level of leverage becomes a factor in determining the amount of profit and predicting future earnings.…”