VALUE RELEVANCE OF ALTERNATIVE ACCOUNTING PERFORMANCE MEASURES: EMPIRICAL STUDY IN INDONESIA

Nikmah, Nikmah (2014) VALUE RELEVANCE OF ALTERNATIVE ACCOUNTING PERFORMANCE MEASURES: EMPIRICAL STUDY IN INDONESIA. In: "ASIA EMERGING ECONOMY TOWARD GLOBAL ECONOMIC INTEGRATION", 18-20 Oktober 2012, Fakultas Ekonomi Universitas Sriwijaya Palembang, Indonesia.

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Abstract

Published financial statements are an important source of information needed by the company internally and externally. Investors were external user of accounting information in financial statements to support the investment decision. The quality of financial reports will be higher if there is the value relevance of accounting information. The objective of this study was to test the value relevance of alternative accounting performance measures including total revenue, sub-item of accounting profit (gross profit, operating income, earning before tax, net income), total cash flow and book value of equity to the shares return in the Indonesia Stock Exchange (BEI). This study was conducted at the manufacturing companies listed on the Stock Exchange in the period of 2006-2010. Sampling technique based on purposive sampling to obtain a sample of 58 companies. Analytical model used is adjusted R-Square to determine the ability of information in explaining the variability of stock returns or explanatory power of accounting information. This study showed that earning before tax had the greatest explanatory power, or was said the most relevant, followed by the net income, operating income, gross profit, total cash flow total revenues. Book value of equity had the smallest explanatory power than other information.

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