Default Risk, Company Ownership, And Earning Response Coefficient In Indonesia Stock Excahange (IDX): A Moderation Analysis

  • Nanu Hasanuh, Nugraha, Disman, M. Wahyudin Zarkasyi

Abstract

This study examines (a) the effect of default risk on ERC and (b) the role of company ownership, both managerial and institutional, in reducing the impact of default risk on ERC. The independent variable is the default risk and the independent variable is the earnings response coefficient, while the moderating variable is managerial ownership and institutional ownership.  The study uses Moderated Regression Analysis (MRA) on 1,360 data from 272 companies listed on the Indonesia Stock Exchange (IDX) in 2013-2017. The results show that default risk has no effect on ERC and company ownership. Also, managerial and institutional ownership does not moderate the effect of default risk on ERC. Overall, the model used in this study disapproves Dhaliwal's theoretical predictions. The results of this study indicate investments in Indonesia are made without considering financial variables such as default risk, and managerial and institutional ownership. The study proves the additional, comprehensive importance in the ERC literature, especially in Indonesia as a developing country.

Published
2020-05-20
How to Cite
Nanu Hasanuh, Nugraha, Disman, M. Wahyudin Zarkasyi. (2020). Default Risk, Company Ownership, And Earning Response Coefficient In Indonesia Stock Excahange (IDX): A Moderation Analysis. International Journal of Advanced Science and Technology, 29(9s), 4870 - 4878. Retrieved from https://sersc.org/journals/index.php/IJAST/article/view/17331