THE
EFFECT OF EARNING PERSISTENCE AND GROWTH OPPORTUNITIES ON FUTURE EARNING
RESPONSE COEFFICIENT WITH PUBLIC OWNERSHIP AS MODERATION
Pratiwi
Nila Sari
Faculty of Economics and
Business, Universitas
Bhayangkara Jakarta Raya, Indonesia
Email: [email protected]
|
KEYWORDS earning
persistence; growth opportunities; FERC; public ownership |
ABSTRACT The
role of public ownership in moderating the effect of earning persistence and
growth opportunities on the future earnings responses’ coefficient is the
focus of this study. Understanding the background of these concepts provides
context for the research. This study aims to determine the role of public
ownership in moderating the effect of earning persistence and growth
opportunities on future earnings responses coefficient. This research uses
companies in the Consumer Cyclicals sector and the Consumer Non-Cyclicals
sector during the 2018-2021 period. Sampling method with purposive sampling.
The results of this study indicate that earnings persistence affects the
Future Earning Responses Coefficient. Growth Opportunities have no effect on
the Future Earning Responses Coefficient. The role of public ownership is
able to strengthen the effect of earning persistence and Growth Opportunities
on Future Earning Responses Coefficient. |
INTRODUCTION
Business is one way to maximize the
country's economy which includes several elements that need to be run and
managed properly. One of the company's goals is the success of the shareholders
(investors). Profitability is one of the factors potential investors consider
when they consider investing. The majority of potential investors carry out
their investments in order to obtain dividends from the profits generated by
the company. To generate consistent returns, investors need to know the profit
(income) of the company. Where the return obtained comes from profits, thus
investors are required to predict future earnings.
Accounting profit information is the most
important information used to predict profits and stock returns in the future.
Statement of Financial Accounting Concept (SFAC) No. 1 explains that company
income is useful as an evaluation of company performance, helps evaluate
representative long-term profits, predicts future income and assesses
investment risk. According to Cho and Jung (1991), profits
presented in a financial report can generate various responses indicating
market reactions to earnings information.
Starting from research related to the
Future Earning Response Coefficient (FERC) which was carried out (Ball, 1968)
was to test profit information. According to Collins et al., (1994). Future
Earnings Response Coefficient is an approach that functions to measure the
amount of information about future earnings as reflected in changes in current
earnings. In this case, the Future Earnings Response Coefficient is usually
used in predicting future earnings. Various factors that affect the Future
Earnings Response Coefficient include Growth Opportunity and Public Ownership.
Profit information is the most important
information in making decisions, where good decisions are obtained if you have
quality profits. Where quality earnings are earnings that can predict future
earnings (Penman & Zhang, 2002). On the other hand, earnings quality is the
ability of earnings to reflect the truth about company profits and to support
predicting future earnings, considering the persistence and stability of
earnings (Bellovary, 2005). Persistent profit is profit that has a tendency not
to fluctuate and can be used as a description of the sustainability of future
profits. In this case, earnings persistence is the most important part because
the more persistent a profit is, the more investors will have the ability to
predict future earnings. Whereas,
Some of the phenomena related to company
cases that occur such as the low probability that a number of companies will
experience a decline in share prices will result in a decrease in the level of
investor confidence which is a cause of a decrease in company performance. The
phenomenon that causes the persistence of earnings is questionable because
profits that fluctuate sharply in a short span of time show that the company
cannot maintain the profits it is currently getting or guarantee future
profits. Because management often uses profits to attract potential investors,
management designs these profits to influence investors' decisions. Companies
need persistent profits to show good company performance in the eyes of
shareholders or creditors.
The results of research conducted by
Mulyani et al., (2007) the results show
that Earnings persistence has a positive influence on the future earnings
response coefficient (FERC). The higher the persistent profit, the greater the
company's profit, and the more significant the future earnings response coefficient
(FERC). So, through persistent profit information it shows that the company can
cause a positive market reaction for the company. Ekky (2016) explains that
earnings persistence has a positive influence on the future earnings response
coefficient (FERC). On the other hand, Susanto (2012) and Buana (2014) explains that
persistent earnings have no effect on the future earnings response coefficient
(FERC). Where income smoothing is a pattern applied by management by adding or
subtracting profits to minimize profit fluctuations presented in financial
reports.
Growth opportunities describe the
company's growth opportunities in the future. The view of the market
(shareholders or investors) on the growth potential of a company can be seen
from the stock price which is the expected value of future benefits.
Shareholders are more responsive to companies with high growth potential.
According to Palup (2006), this is because
companies with high growth potential are able to provide great benefits for
investors in the future.
Growth opportunities in terms of future
return expectations, both companies and investors will both benefit because
growth opportunities can maximize the company's ERC (R. W. Scott, 2003). Bad or good news
about current earnings can shed light on a company's future growth
opportunities, resulting in a higher ERC. Profits that are assessed according
to history cannot show the ability to grow in the future, but the situation is
different if current profits show high profits from various company investment
projects, this can show the market that the company is experiencing rapid
growth in the future. Where this growth continues to come through sustainable
probabilities, which increase the company's total assets.
The company's success with current
investments also leads the market to suggest that the company will continue to
be successful in the future. The company is intended as a company that develops
or grows so that it is able to obtain capital from investors as a source of
further growth. Thus, the higher the company's current growth rate, the higher
the company's ERC (W. Scott, 2009).
Research conducted by Wiguna and
Murwaningsari (2022), found that
growth has no effect on FERC. WCR as a moderator of the effect of SR and Growth
on FERC weakens the previous effect. However, the research results are not in
line with Muwarningsari (2013) which shows that
the growth opportunity results have a positive effect on the Future Earnings
Response Coefficient.
Based on the inconsistency of research
results that occurred in previous studies, it is possible that there are
variables or other factors that influence one variable to another (Handayani & Andyarini, 2020). Therefore, in
overcoming these problems, the difference in this study is to add a moderating
variable in the form of public ownership which is expected to drive the
influence of earnings persistence and growth opportunities on FERC.
The research that the researchers will
carry out has the aim of testing and providing empirical evidence regarding the
effect of growth opportunities and profit persistence on the future earnings
response coefficient which is moderated by public ownership in companies in the
Non-Primary Consumer Goods (Consumer Cyclicals) and Primary Consumer Goods
(Consumer Non-Cyclicals) sectors listed on the Indonesia Stock Exchange for the
2018-2021 period.
This research uses several grand theories, among others, signaling
theory is that company executives have better information about their company
so they wish to provide this information to investors so that the company's
stock price increases (Ross, 1977). In addition, the signals that can be shown by the
company include financial information that can be considered capable of
minimizing uncertainty regarding the company's prospects in the future (Wolk et al., 2001).
In the agency model, a system is created that includes both parties,
thus a work contract is needed between the management (agent) and the owner
(principal). Jensen and Meckling (2019) states that the agent and principal relationship is
a contractual relationship between one or more people (principal) that binds
other people (agents) to carry out various services on their behalf which
involve delegating various decision-making powers to agents.
Profit persistence is profit that can be used as profit itself. This
means that current earnings can be used as an indicator of future earnings.
According to Tucker & Zarowin (2006a), the more persistent a profit is, the
more informative the profit is, and the less persistent a profit is, the less
informative the profit is. Earnings persistence is a measure of earnings
quality from the slope of the current earnig regression coefficient on lagged
earnings. Theories related to accounting profit figures that lead to earnings
persistence depend on the following assumptions. First, this theory assumes
that stock prices are similar to the present value of expected future dividends.
Second, this theory assumes that current and future profitability provide
information to investors regarding current and future dividends. Third, this
theory assumes that earnings (or more broadly financial statements) provide
information to investors regarding current profitability and future
expectations Nichols and Wahlen (2004).
Market assessment of the possibility of a company to grow can be seen
from the share price that is formed into an expected value of the future
benefits to be obtained. In this case, investors will give a greater response
to the company through high growth possibilities. This is because companies
that have high growth possibilities will also provide high benefits in the
future for shareholders.
Brown (2001); Muwarningsari (2013); Henny (2017), explains that growth opportunities are something
that investors, including institutional investors, hope for, because growth
opportunities can give positive signals to shareholders regarding future
earnings information.
The market that reacts to the announcement of earnings shows that the
earnings conveyed by the company have information content. Where this indicates
the relevance of accounting earnings on stock prices as a form of market
reaction. According to Lipe (1990), predictability of accounting profit is the
ability of accounting profit in the past to predict accounting profit in the
future, and is shown in the variance of earnings shock in accounting profit in
time series. As for those who explain that the Future earnings response
coefficient is a prediction of future earnings in order to see how much
information is obtained from future earnings along with changes in present
earnings (Collins et al., 1994).
Public ownership is the level of company share ownership by the general
public (public) outside the company environment. According to Wijayanti (2020), company ownership by the general public has great
power within the company because it is able to influence the company through
the mass media which are all seen as the voice of the community (public).
The formulation of the
research hypothesis is as follows:
H1: Earnings persistence
has a positive effect on the future earnings response coefficient
H2: Growth opportunities have a positive effect on the future earnings
response coefficient.
H3: Public Ownership strengthens the positive effect of earnings
persistence on the future earnings response coefficient.
H4: Public Ownership strengthens the positive effect of earnings
persistence on the future earnings response coefficient.
RESEARCH
METHODS
This research is a type of causality
research that examines the influence between variables according to previous
studies (Sekaran & Bougie, 2016). The unit of
research analysis is the Consumer Cyclicals sector and the Consumer
Non-Cyclicals sector which are listed on the Indonesia Stock Exchange. The data
used is time series data for 2018-2021, namely the company's annual report and
sustainability report obtained from the company's official website. The
research population is 210 companies. The sample collection method used was
purposive sampling. So the research sample totaled 51
companies with a period of 4 years, so the data used in this study amounted to
204.
Earnings persistence is used in assessing
earnings quality because earnings persistence has predictive value, thus it can
be used by stakeholders in evaluating past, present and future events (Hanlon & Heitzman, 2010). Earnings
persistence shows the ability of profits that can be used as future earnings.
The more persistent a profit is, the higher the expectation of an increase in
future profits. According to Abousamak (2018), earnings
persistence can be obtained by the formula:
EARj,t+1 =
α +β1EARsJ,t+ Ut+1
Notes: EAR
= net income before extraordinary items and discontinued operations, deflated
by the average of total assets. 𝛽=
coefficient of earnings persistence regression results.
Freeman
et al. (1982) argue that β1 measures the persistence of the accounting rate of
return on assets (ie, income). The closer β1 is to one, the more aggregate
earnings persistence appears in the model. In other words, productive
performance is not pure while also not following a random walk.
This
public ownership refers to research (Lestari & Hermanto, 2015) where the
measurement is calculated from the percentage (%) of public share ownership
that can be observed from the annual financial reports.
The
future earnings response coefficient is a measurement to predict future
earnings, meaning how much information related to cash flow or future earnings
is capitalized into stock prices. According to Tucker and Zarowin (2006a), the
FERC measurement used in this study is the CKSS model in the regression
equation of the future earnings response coefficient, with the formula:
Rt= b0 + b1 X t -1 + b2 X t +
b3 X t3 + b4 R t3 + et
Notes:
Rt = Stock return in year t, Xt-1 = Earning per share (EPS) for year t-1
divided by the stock price at the beginning of year t, Xt = Earning per share
(EPS) for year t divided by the stock price at the beginning of year t, Xt3 =
Total earnings per share (EPS) for years t+1 to t+3, divided by the stock price
at the beginning of year t, Rt3 = Aggregate stock return for years t+1 to t+3,
et = Error
The
coefficient on past earnings (t-1) = (b1) is predicted to be negative, the
future earnings response coefficient (FERC) = (b3) is predicted to be positive,
the earnings response coefficient (ERC) = (b2) is predicted to be positive, the
coefficient on future returns = (b4) is predicted to be negative.
Tucker and
Zarowin (2006b), explains that Stock Return can be calculated using the formula
contained in (Rachmawati, 2021):
Rt =
Pt-Pt-1/Pt-1
Notes:
Pt-1 = stock price for period t-1, Pt = stock price for period t, Rt = realized
return
The control variables in this study
consist of company size reflected in the company's total assets. Company size
in this study is measured by the formula (Murwaningsari & Rachmawati, 2017;
Tonay & Murwaningsari, 2022): Size = Ln Total Assets. Then the other
control variable is Leverage, which is the ratio of the total book value of
debt to total assets. Thus, this ratio shows how far the debt can be covered by
its assets. Leverage is calculated using the debt to assets ratio (DAR)
(Murwaningsari, 2014), namely total assets divided by total debt. Growth
control variable uses the formula: net profit - net profit t-1 / net profit
t-1.
This analysis method is carried out by
using Eviews to process research data. The first analysis is descriptive
statistics and using the regression model estimation method using panel data
can be carried out through various approaches, including: Common Effect Model
(CEM), Fixed Effect Model (FEM) and Random Effect Model (REM). To manage panel
data, it can be carried out by selecting the right model through various tests (Basuki
& Prawoto, 2017), namely: Chow Test, Hausman Test and Langrange Multiplier
Test. Then a hypothesis test was carried out consisting of an individual test
(t test), simultaneous test (F test) and the coefficient of determination (R2).
The
purpose of this study is to examine the effect of Earning persistence and
Growth opportunities on FERC moderated by Public Ownership. Solimun (2011)
states that there are 4 (four) groupings of moderating variables, namely:
1) Homologizer
moderator: a variable that has the potential to become a moderating variable,
does not interact with the independent variables and the dependent variable.
2) Quasi
moderator: a variable that moderates the influence between the independent
variables and the dependent variable. The moderating variable interacts with
the independent variables as well as being the independent variable.
3) Pure
moderator: a variable that moderates the influence between the independent and
dependent variables. Pure moderating variables interact with independent variables
without becoming independent variables.
4) Predictor
moderator: the moderating variable only acts as an independent variable.
The
model in this study is included in the predictor moderator.
The
method used is panel data. Panel data is defined as a combination of data over
time (time series) and data between companies (cross section). The research
model is as follows:
FERC = a + EP + GO + EP*PO + GO*PO + SIZE + LEV +
GROWTH + e
Note: FERC = future earnings response
coefficient, EP = Earning Persistence, GO = Growth opportunities, PO = Public
Ownership, EP*PO = Earning Persistence with moderation of Public Ownership,
GO*PO = Growth opportunities with moderation of Public Ownership, SIZE =
Company size, LEV = Leverage, Growth = company growth, e = Error
RESULTS AND
DISCUSSION
Descriptive
Statistical Analysis
Based
on the data obtained, the company population during the study period was 210
companies. Researchers conducted purposive sampling to obtain complete data.
So, based on purposive sampling, this study only used 51 companies with 204
sample data.
This
study uses descriptive statistics to determine sample size, minimum, maximum,
average and standard deviation. The following is a table with descriptive
statistical results:
Table 1. Descriptive Statistics
|
Variables |
Means |
Median |
Maximum |
Minimum |
std. Dev. |
|
EP |
0.0000 |
-0.1337 |
7.4739 |
-0.2285 |
0.6929 |
|
GO |
0.0881 |
0.0774 |
4.4163 |
-0.8983 |
0.3661 |
|
PO |
23.4442 |
21.4350 |
67,3800 |
0.0000 |
17.2854 |
|
EP*PO |
-1.0716 |
-1.9636 |
186.7720 |
-14.0360 |
14.6126 |
|
GO*PO |
1.8172 |
0.5690 |
46.5463 |
-26.1289 |
6.8131 |
|
Lev |
0.4181 |
0.4100 |
2.0649 |
0.0665 |
0.2261 |
|
SIZE |
29.3557 |
29.4237 |
32.8204 |
25.6294 |
1.3897 |
|
gr |
0.8732 |
0.1190 |
47.0762 |
-0.9738 |
4.4346 |
Source:
Processed Data, 2023
Based
on table 1 shows that the earning persistence variable has a minimum value of
-0.2285 and a maximum value of 7.4739. The average earning persistence is
0.0000, with a standard deviation value of 0.6929. The data on this variable is
said to be good because the data distribution is homogeneous which can be seen
in the average value greater than the standard deviation (0.0000 > 0.6929).
The
growth opportunities variable has a minimum value of -0.8983 and a maximum
value of 4.4163. The average growth opportunities are 0.0881, or 8.81%, meaning
that the average company in the Consumer Cyclicals sector and the Consumer
Non-Cyclicals sector is because in 2020 there was the Covid-19 pandemic which
caused several companies to experience a decrease in revenue.
The
public ownership variable has a minimum value of 0.0000 and a maximum value of
67.3800. The average value of public ownership is 23.4442 with a standard
deviation of 17.2854. This means that the data in this variable is said to be
good because the distribution of the data is homogeneous which can be seen in
the average value which is greater than the standard deviation (0.0000 >
17.2854).
Best
Model
Determination
of the best model in panel data regression with common effects, fixed effects,
and random effects models. These three techniques are used in panel data
regression to obtain the right model in estimating panel data regression. In
determining the model used, the best test is carried out based on the Chow
test, Hausman test, and Langrange Multiplier test which aims to get the best
model.
Table 2. Chow, Hausman and
Langrange Multiplier Test
|
testing |
Prob. |
Significant |
Selected Model |
|
ChowTest |
0.8767 |
0.05 |
Common Effects Model |
|
Hausman test |
0.9716 |
0.05 |
Random Effects Model |
|
LM Test |
0.2417 |
0.05 |
Common Effects Model |
Source:
Processed Data, 2023
The
Chow test is used in order to determine the best approach between the Common
Effect Model (CEM) and Fixed Effect Model (FEM) approaches. The hypothesis test
is as follows: If the p-value of the chi-square cross-section <0.05 then Ho
is rejected, Ha is accepted (FEM), If the p-value of the chi-square
cross-section is > 0.05 then Ho is accepted, Ha is rejected (CEM). The table
above shows that the p-value cross section chi-square is 0.0075 <0.05, so it
can be said that Ha is accepted, which means that the Fixed Effect Model (FEM) is
more appropriate to use the regression equation estimation model.
The
Hausman test is carried out if in the Chow test, the model chosen is FEM. The
Hausman test is used in order to determine the best approach between the Random
Effect Model (REM) and Fixed Effect Model (FEM) approaches. The result of
testing using this test is to find out whether the panel data regression
technique using the Generalized Least Square method (random effect model) is
better than panel data regression using the Least Square Dummy Variable method
(fixed effect model). The hypothesis test is if the p-value cross section
random > 0.05 then H0 is accepted or Ha is accepted (REM), however if the
p-value cross section random is <0.05 then Ha is accepted or H0 is rejected
(FEM). From the table above it can be seen that the
p-value of random cross section is 0.1809 > 0.05,
The
Langrange multiplier test was carried out to determine whether the right model
is the Common Effect Model (CEM) or the Random Effect Model (REM). As for the
hypothesis test, the p-value of Breusch Pagan > 0.05 means that H0 is
accepted or Ha is rejected (CEM). However, if the p-value of Breusch Pagan
<0.05 then Ha is accepted or H0 is rejected (REM). From the table above, it
is obtained that the p-value of Breusch Pagan is 0.1036 > 0.05, so it can be
said that Ha is accepted, which means that the Common Effect Model (CEM) model
is more appropriate to use as a regression equation estimation model.
Hypothesis Testing
Before
carrying out further analysis stages, there are statistical tests which
include: F test, t test, and test of the coefficient of determination.
Table
3. Statistical Test Results Using the Fixed Effect Model Approach
|
Variables |
coefficient |
t-Statistics |
Prob. |
|
|
C |
0.317 |
4,131 |
0.000 |
*** |
|
EP |
0.004 |
2,607 |
0.010 |
*** |
|
GO |
-0.001 |
-0.774 |
0.440 |
|
|
PO |
0.001 |
4,053 |
0.000 |
*** |
|
EP_PO |
-0.001 |
-3,170 |
0.002 |
*** |
|
GO_PO |
0.001 |
20,949 |
0.000 |
*** |
|
Lev |
0.020 |
1,664 |
0.098 |
|
|
SIZE |
-0.012 |
-4,005 |
0.000 |
*** |
|
gr |
-0.006 |
-3,037 |
0.003 |
*** |
|
Lagged FERC |
-0.229 |
-1,373 |
0.172 |
|
|
R-squared |
0.155 |
Mean dependent var |
-0.002 |
|
|
Adjusted R-squared |
0.102 |
SD dependent var |
0.383 |
|
|
SE of regression |
0.362 |
Sum squared residue |
18,783 |
|
|
F-statistics |
2,909 |
Durbin-Watson stat |
1.151 |
|
|
Prob(F-statistic) |
0.003 |
*** |
||
Source:
Processed Data, 2023
The
results of the F statistical test show that the probability value of the F
statistic is less than the 5% significance level (0.003 <0.05), so that
earnings persistence and growth opportunities together have a significant
effect on the future earnings response coefficient.
To
analyze the effect partially carried out using the t test. The probability
value of the earning persistence variable is greater than the 5% significance
level (0.01 <0.05) so that partially earnings persistence influences the
future earnings response coefficient. The growth opportunities variable has a
probability value of 0.440 > 0.05 so that partially growth opportunities
have no effect on the future earnings response coefficient. Earning persistence
variable moderated by public ownership has a probability value of 0.002
<0.05, which means that public ownership is able to strengthen the influence
of earnings persistence on the future earnings response coefficient. The growth
opportunities variable moderated by public ownership has a probability value of
0.000 <0.
The
coefficient of determination (Adjusted R-Squared) in this study has a value of
0.102, meaning that the ability of the independent variable to explain the
variance of the dependent variable is 10.2%, while 42.69% is influenced by other
variables not included in this study.
Effect of earnings persistence on future earnings
response coefficient
Based
on the results of the t test indicating that the earnings persistence variable
has an influence on the future earnings response coefficient, the results of
this study are in line with research (Mulyani et al., 2007) which states that
earnings persistence has a positive effect on the earnings response
coefficient. Therefore, the more constant the change in income from time to
time, the higher the level of profit coefficient, because this condition
indicates that the profit generated by the company continues to increase.
The
better the earnings quality, the higher the predicted FERC value, investors
view that current earnings predict returns and future profits (Tucker &
Zarowin, 2006). According to Collins et al (1994), the market's response to
earnings is influenced by various factors, namely the informativeness of the
market price, the higher the informativeness of the stock price, the greater
the information content of accounting earnings, thus, the FERC can decrease if
the informativeness of the stock price decreases. The more informative a stock
price is, the more earnings persistence it will increase, thus this study, in
addition to measuring the informativeness of stock prices through FERC, also
observes earnings persistence (Tucker & Zarowin, 2006). The higher the
earnings persistence, the more informative the profit generated by the company
and the higher the FERC value. Thus, persistent profit information shows that
the company can build a positive market reaction for the company.
Effect of Growth Opportunities on future earnings
response coefficient
The
results of the second hypothesis show that growth opportunities have no effect
on the future earnings response coefficient. The results of the hypothesis in
this study are consistent with research (Wiguna & Murwaningsari, 2022),
namely growth opportunities have no effect on FERC. This condition means that
companies with low growth opportunities tend to have a negative profit surprise
which is a signal for investors in the capital market that in the end they are
not able to increase the company's stock price. This means that the opportunity
for the company to grow is low, the less likely it is for the company to obtain
profits from the company in the future.
Effect of earnings
persistence on future earnings response coefficient moderated by public
ownership
Based
on the results of testing the moderating variable, it shows that public
ownership can strengthen the effect of earnings persistence on the future
earnings response coefficient, where Widhianningrum (2012) explains that public
ownership has a partial effect on income smoothing practices carried out by
management. This is because the higher the level of ownership by the public, it
will force management to be better at conveying company profit information. Luo
et al. (2006); Cohen and Langberg (2009); Huang and Wright (2015), explained
that public ownership provides an opportunity for companies to maximize public
trust in public ownership, thereby providing guarantees for loans received from
other parties to the company.
Effect of Growth
Opportunities on future earnings response coefficient moderated by public
ownership
The
results of testing the moderating variable indicate that public ownership is
able to strengthen the effect of growth opportunities on the response
coefficient of future earnings. In Henny and Sha (2020) with growth
opportunities as a moderating variable will be able to strengthen the
relationship between the future earnings response coefficient (FERC) and
managerial ownership. These results prove that growth opportunities have a
statistically significant effect on strengthening the positive relationship
between FERC and managerial ownership. These results are in line with Brown
(2001), Muwarningsari (2013) and Henny (2017) which prove that management tends
to maximize firm value with opportunities for company growth that tend to
increase.
The
company has the same opportunity to develop or grow. As the company grows, FERC
will be able to respond well. This means that the FERC value will increase.
Meanwhile, if the company does not experience growth, it will cause FERC to
decline. (Collins & Kothari, 1989) in (Mulyani et al., 2007) shows that
several companies with growth opportunities will have the same situation with a
good ERC. Conditions indicate a greater opportunity for their company to grow,
if the company's opportunities are higher, it means to get or increase the many
profits that the company is currently getting.
CONCLUSION
This
study aims to obtain empirical evidence of the influence of earnings
persistence, growth opportunities on the response coefficient of future
earnings with public ownership as moderation. Based on the results of the tests
conducted, it can be concluded that earnings persistence has a positive effect
on the response coefficient of future earnings. Growth opportunities have no
effect on the future earnings response coefficient. The role of public
ownership is able to strengthen the effect of earnings persistence on the
future earnings response coefficient. The role of public ownership is able to
strengthen the effect of growth opportunities on the response coefficient of
future earnings.
The
implication of this research is that companies pay more attention to factors
that can affect the response coefficient of future earnings, in order to assist
companies in attracting investors to invest in their companies and for
investors, growth opportunity factors are not necessarily things that need
attention that affect the response coefficient of future earnings. future,
because there is persistence of earnings and other factors that may affect the
response coefficient of future earnings; Suggestions for future research, can
carry out further research related to the informativeness of current earnings
and future earnings by doing the following things: increase the number of
research samples and add a longer time period including the future period in
order to obtain results related to better informative future earnings.
REFERENCES
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