Earnings quality of Indonesian firms surrounding initial public offerings
by Yanthi Hutagaol-Martowidjojo; Felita Widyanto
International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE), Vol. 14, No. 1, 2018

Abstract: This research aims to examine the changes in earnings quality of Indonesian firms transitioning from private to public companies by examining accounting-based attributes of earnings; accrual quality, earnings persistence, and earnings predictability, before and after IPO. Accrual quality is assessed using the abnormal accrual model and Dechow and Dichev (DD) model; earnings persistence and predictability are assessed through net income autoregressive model. Using 103 Indonesian non-finance IPO firms, this research concludes that earnings quality of IPO firms changed along with the alteration of their status from private to public firms. Post-IPO (after becoming public firms), the sample shows a higher quality of earnings in terms of accrual quality and earnings persistence increases after IPO. However, this research could not reject the hypothesis of decreasing post-IPO earnings predictability due to the nature of IPO firms.

Online publication date: Tue, 23-Jan-2018

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