Authors: Iwan Setiadi; S. Purnamasari; Erna Setiany
Addresses: Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami No. 36A, Kentingan, Surakarta, 57126, Indonesia ' Faculty of Economics, Universitas Muhammadiyah Tangerang, Jl. Perintis Kemerdekaan I/33, Tangerng 15000, Indonesia ' Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami No. 36A, Kentingan, Surakarta, 57126, Indonesia
Abstract: The capital market reactions are proxied by cumulative abnormal return (CAR) and stock trading volume (STV) activity, while for the earnings information the proxy of unexpected earnings was used. This research used independent samples tests. The result shows that when measured by CAR, the market does not show any different reaction, but when measured by STV, the market reactions of the income smoothing group are significantly different from those of the non-income smoothing group. Then the sample were split into two group of positive earnings surprise and negative earnings surprise. The positive earnings surprise group shows no different market reaction when measured by CAR, but show different market reaction when measured by STV. The negative earnings surprise group shows no different market reaction when measured by CAR and STV.
Keywords: income smoothing; unexpected earnings; market reaction; abnormal returns; stock trading volume activity; Indonesia; manufacturing industry.
International Journal of Monetary Economics and Finance, 2015 Vol.8 No.2, pp.202 - 212
Available online: 23 Jul 2015 *Full-text access for editors Access for subscribers Purchase this article Comment on this article