This research aims at identifying firm’s tendency to execute real activities manipulation through cash flow from operating activities and its impact to market performance. The sample is drawn from firms in the biggest 50 firms with assets above 1 trillion rupiahs for period of 2001 – 2006, which are published in Swa100. The research model used is based on Roychowdhury’s model (2003). Prior to test the hypotheses, the researcher employed regression model to determine normal and abnormal cash flow from operating activities. Then, descriptive statistics, one sample t-test, and two independent samples t-test are used to test the research hypotheses.
The result shows that firms tend to execute real activities manipulation through operating cash flow. Moreover, the impact of real activities manipulation on market performance shows firms that are more likely executing real activities manipulation have higher market performance than their counterparts. After controlling for industrial types of the companies, the result finds that manufacturing firms execute more real activities manipulation than non manufacturing firms.
Keywords: Operating cash flow, real activities manipulation, market performance.
LATAR BELAKANG PENELITIAN
The company as a collection of contracts (nexus of contracts) between the various parties is a contract between company owners and employees relating to wages or compensation, the contract between the company and creditors relating to debt, and tax-related government contracts. In the company there is the owner of the company (principal) and management (agent). Both the principal and agent each have vested interests that could create conflicts of interest (conflict of interest).
The management or managers are required to meet the interests of company owners, but in addition, managers also have personal goals that may be different from the owner. Asymmetry of information (information asymmetry) between the management and owners (shareholders) provide flexibility and opportunity for managers to perform engineering and construction engineering terms as profit or earnings management (earnings management). The objective of earnings management is to avoid losses, compensation, meet profit targets, and analysts forecast (analyst forecast).
Jurnal Simposium Nasional Akuntasi XI (SNA 11)