Paper Title
The Valuation of Market-Based Attributes of Earnings Quality of Indonesian Listed Firms
Abstract
This paper examines the role of market-based attributes of earnings quality on market valuation of Indonesian public firms. We use a sample of 75 non-financial Indonesian public firms listed in the Kompas100 index during the 2007-2015. We use standard measures to estimate the values of each of market attributes (e.g., [1], [2], and the firm valuation is proxied by Tobin’s Q. We show that there is a negative relationship between market-based attributes and the valuation of Indonesian public firms – higher quality of earnings thus leads to lower valuation. We conjecture that this is due to governance effects shown in earlier literature. The findings are also consistent after controlling for earnings, firm size, financial leverage, and ownership structure.
Index Terms - Conservatism, earnings quality, firm valuation, value relevance,