How Temporary Book Tax Differences Influence Earning Quality? An Integrated Analysis with Investment Opportunity Set and Human Capital
DOI:
https://doi.org/10.23887/jia.v8i1.60842Keywords:
earnings quality, book tax differences, investment opportunity sets, human capitalAbstract
We examined three variables, including the differences of temporary book tax, investment opportunity sets, and human capital to recognize if any of these variables have different impact on earnings quality. The population use of this research is manufacturing companies listed on the Indonesia Stock Exchange in 2017-2021. Based on the purposive sampling technique, a total of 338 data were obtained. By using ordinary least square technique of analysis, the test results reveal that the differences of temporary book tax have a negative impact on quality of earnings and the investment opportunity set has a positive impact on quality of earnings. Meanwhile, human capital has no impact on quality of earnings. Our study provides insight that the differences of temporary book tax and investment opportunity sets are important information that must be considered by investors in analyzing the quality of company earnings, so that investment provides optimal returns.
References
Abdullaev, B., & Park, J. H. (2019). The Effect of Book-Tax D ifference on Earnings Quality: Empirical Evidence from KOSPI companies in Korea. GLOBAL BUSINESS FINANCE REVIEW, 24(3), 14–28. https://doi.org/10.17549/gbfr.2019.24.3.14
ACFE. (2022). Occupational Fraud 2022: A Report to the nations. Association of Certified Fraud Examiners, 1–96. https://legacy.acfe.com/report-to-the-nations/2022/
Ahangar, R. G. (2011). The relationship between intellectual capital and financial performance: An empirical investigation in an Iranian company. African Journal of Business Management, 5(1), 88–95. https://doi.org/10.5897/AJBM10.712
Al-Gamrh, B., Ku Ismail, K. N. I., Ahsan, T., & Alquhaif, A. (2020). Investment opportunities, corporate governance quality, and firm performance in the UAE. Journal of Accounting in Emerging Economies, 10(2), 261–276. https://doi.org/10.1108/JAEE-12-2018-0134
Andriani, B., Nurnajamuddin, M., & Rosyadah, K. (2021). Does Profitability, Firm Size, and Investment Opportunity Set Affect Earnings Quality? Jurnal Akuntansi, 25(1), 54–69. https://doi.org/10.24912/ja.v25i1.724
Ashma’, F. U., & Rahmawati, E. (2019). Pengaruh Persistensi Laba, Book Tax Differences, Investment Opportunity Set dan Struktur Modal Terhadap Kualitas Laba dengan Konservatisme Akuntansi Sebagai Variabel Moderasi (Studi Empiris pada Perusahaan Jasa yang Terdaftar di BEI Periode 2015-2017). Reviu Akuntansi Dan Bisnis Indonesia, 3(2), 206–219. https://doi.org/10.18196/rab.030246
Bayraktaroglu, A. E., Calisir, F., & Baskak, M. (2019). Intellectual capital and firm performance: an extended VAIC model. Journal of Intellectual Capital, 20(3), 406–425. https://doi.org/10.1108/JIC-12-2017-0184
Bilal, B., Chen, S., & Komal, B. (2018). Audit committee financial expertise and earnings quality: A meta-analysis. Journal of Business Research, 84(November 2017), 253–270. https://doi.org/10.1016/j.jbusres.2017.11.048
Blaylock, B., Shevlin, T., & Wilson, R. J. (2012). Tax avoidance, large positive temporary book-tax differences, and earnings persistence. In Accounting Review (Vol. 87, Issue 1, pp. 91–120). https://doi.org/10.2308/accr-10158
Chi, S. S., Pincus, M., & Teoh, S. H. (2014). Mispricing of book-tax differences and the trading behavior of short sellers and insiders. Accounting Review, 89(2), 511–543. https://doi.org/10.2308/accr-50644
Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3–42. https://doi.org/10.1016/0165-4101(94)90016-7
Dechow, P. M., & Dichev, I. D. (2002). Quality Earnings: The Accruals Accrual Estimation Errors. The Accounting Review, 77(2002), 35–59.
Elsiddig Ahmed, I. (2020). The Qualitative Characteristics of Accounting Information, Earnings Quality, and Islamic Banking Performance: Evidence from the Gulf Banking Sector. International Journal of Financial Studies, 8(2), 30. https://doi.org/10.3390/ijfs8020030
Fadilah, N., & Wijayanti, P. (2017). Book Tax Differences dan Persistensi Laba pada Perusahaan Manufaktur. Jurnal Akuntansi Multiparadigma JAMAL, 8. https://doi.org/10.18202/jamal.2017.08.7053
Feltham, G. A., & Ohlson, J. A. (1995). Valuation and Clean Surplus Accounting for Operating and Financial Activities. Contemporary Accounting Research, 11(2), 689–731. https://doi.org/10.1111/j.1911-3846.1995.tb00462.x
Gao, H., Harford, J., & Li, K. (2013). Determinants of corporate cash policy: Insights from private firms. Journal of Financial Economics, 109(3), 623–639. https://doi.org/10.1016/j.jfineco.2013.04.008
Givoly, D., Hayn, C. K., & Katz, S. P. (2010). Does Public Ownership of Equity Improve Earnings Quality? The Accounting Review, 85(1), 195–225. https://doi.org/10.2308/accr.2010.85.1.195
Hamdan, A. (2020). The role of the audit committee in improving earnings quality: The case of industrial companies in GCC. Journal of International Studies, 13(2), 127–138. https://doi.org/10.14254/2071-8330.2020/13-2/9
Handi, H., Rahmatika, D. N., & Fanani, B. (2022). Understanding Earnings Response Coefficient from Growth Opportunities, Earnings Persistance, and Intellectual Capital; Empirical Study from IDX-30 Indexed Companies. Proceedings of the 2nd International Conference on Social Science, Humanities, Education and Society Development (ICONS 2021), 629(Icons 2021), 127–134. https://doi.org/10.2991/assehr.k.220101.020
Herlina, H., Santosa, E. W. A., Alfitri, D. N., & Nugroho, W. S. (2023). An integrated model to explain earnings quality: financial performance as a intervening. EconBank: Jurnal of Economics and Banking, 5(April), 1–12.
Hope, O.-K., Thomas, W. B., & Vyas, D. (2013). Financial Reporting Quality of U.S. Private and Public Firms. The Accounting Review, 88(5), 1715–1742. https://doi.org/10.2308/accr-50494
Huang, D., & Wang, C. (2013). Book‐tax differences and earnings quality for the banking industry: evidence from Taiwan. Pacific Accounting Review, 25(2), 145–164. https://doi.org/10.1108/PAR-12-2011-0052
Indarti, M. G. K., Widiatmoko, J., Badjuri, A., & Ambarwati, T. (2021). Determinan Konservatisme Akuntansi: Studi Empiris pada Perusahaan Manufaktur di Bursa Efek Indonesia. Jurnal Akuntansi Indonesia, 10(2), 161–174. https://doi.org/10.23887/jimat.v13i03.44363
Ismail, W. A. W., Harymawan, I., Agustia, D., & Kamarudin, K. A. (2021). Financial reporting quality following the corporate governance reforms: A conditional conservatism perspective. Journal of Governance and Regulation, 10(2, special issue), 216–225. https://doi.org/10.22495/jgrv10i2siart3
Ismail, W. A. W., Kamarudin, K. A., Van Zijl, T., & Dunstan, K. (2013). Earnings quality and the adoption of IFRS-based accounting standards: Evidence from an emerging market. Asian Review of Accounting, 21(1), 53–73. https://doi.org/10.1108/13217341311316940
Jackson, M. (2015). Book-tax differences and future earnings changes. Journal of the American Taxation Association, 37(2), 49–73. https://doi.org/10.2308/atax-51164
Kalalo, A. D., & Sofian, S. (2022). Intellectual Capital Affects Earnings Quality with Earnings Management as Intervening Variables. SAR (Soedirman Accounting Review): Journal of Accounting and Business, 07(01), 35–50. https://doi.org/10.32424/1.sar.2022.7.1.6749
Khajavi, S., Arani, M. H. G., & Nafchi, H. F. (2016). Intellectual capital and earnings quality: a comprehensive investigation. International Journal of Learning and Intellectual Capital, 13(4), 316–337. https://doi.org/10.1504/IJLIC.2016.079353
Krismiaji, K., & Sururi, S. (2021). Conservatism, Earnings Quality, and Stock Prices - Indonesian Evidence. Journal of Accounting and Investment, 22(1), 37–50. https://doi.org/10.18196/jai.v22i1.9419
Lin, C. J., Wang, T., & Pan, C. J. (2016). Financial reporting quality and investment decisions for family firms. Asia Pacific Journal of Management, 33(2), 499–532. https://doi.org/10.1007/s10490-015-9438-8
Mangena, M., Pike, R., & Li, J. (2010). Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence. In The Institute of Chartered Accountants of Scotland (First, Issue October).
Melgarejo, M. (2019). The impact of corporate governance on earnings quality: evidence from Peru. Journal of Accounting in Emerging Economies, 9(4), 527–541. https://doi.org/10.1108/JAEE-12-2018-0138
Mention, A. L., & Bontis, N. (2013). Intellectual capital and performance within the banking sector of Luxembourg and Belgium. Journal of Intellectual Capital, 14(2), 286–309. https://doi.org/10.1108/14691931311323896
Murwaningsari, E., & Rachmawati, S. (2017). The Influence of Capital Intensity and Investment Opportunity Set toward Conservatism with Managerial Ownership as Moderating Variable. Journal of Advanced Management Science, 5(6), 445–451. https://doi.org/10.18178/joams.5.6.445-451
Mutuc, E. B. (2021). An integrated model to explain how intellectual capital affects earnings quality: Some evidence from asian emerging economies. Asia-Pacific Social Science Review, 21(2), 202–221. https://www.dlsu.edu.ph/wp-content/uploads/pdf/research/journals/apssr/2021-June-vol21-2/15-An-Integrated-Model-to-Explain-How-Intellectual-Capital-Affects-Earnings-Quality-Some-Evidence-from-Asian-Emerging-Economies
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147–175. https://doi.org/10.1016/0304-405X(77)90015-0
Namazi, M., & Rezaei, G. (2016). The Effects of Earnings Quality Criteria on the Agency Costs: (Evidence from Tehran Stock Exchange Market). Procedia - Social and Behavioral Sciences, 230(May), 67–75. https://doi.org/10.1016/j.sbspro.2016.09.009
Narita, N., & Taqwa, S. (2020). Pengaruh Investment Opportunity Set Terhadap Kualitas Laba Dengan Konservatisme Sebagai Variabel Moderating. Jurnal Eksplorasi Akuntansi, 2(1), 2250–2262. https://doi.org/10.24036/jea.v2i1.210
Nissim, D. (2021). Earnings Quality. In Columbia Business School Research Paper: Vol. March 1. https://doi.org/10.2139/ssrn.3794378
Noga, T. J., & Schnader, A. L. (2013). Book-Tax Differences as an Indicator of Financial Distress. Accounting Horizons, 27(3), 469–489. https://doi.org/10.2308/acch-50481
Putri, N. N. T. A., & Sujana, I. K. (2018). Pengaruh Temporary Book-Tax Differences dan Leverage pada Kualitas Laba Perusahaan Manufaktur yang Terdaftar di BEI. E-Jurnal Akuntansi, 23(2), 1548–1573. https://doi.org/10.24843/EJA.2018.v23.i02.p28
Rusdi, D., Kartika, I., & Indriastuti, M. (2021). Toward Firm Performance in Indonesia: The Role of Good Corporate Governance and Investment Opportunity Set. Jurnal Economia, 17(1), 81–90. https://doi.org/10.21831/economia.v17i1.35562
Salehi, M., & Sehat, M. (2019). Debt maturity structure, institutional ownership and accounting conservatism. Asian Journal of Accounting Research, 4(1), 35–51. https://doi.org/10.1108/AJAR-05-2018-0001
Sarea, A. M., & Alansari, S. H. (2016). The relationship between intellectual capital and earnings quality: evidence froSarea, A. M., & Alansari, S. H. (2016). The relationship between intellectual capital and earnings quality: evidence from listed firms in Bahrain Bourse. International Journal. International Journal of Learning and Intellectual Capital, 13(4), 302. https://doi.org/10.1504/IJLIC.2016.079350
Shen, Y., Gao, D., Bu, D., Yan, L., & Chen, P. (2019). CEO hometown ties and tax avoidance-evidence from China’s listed firms. Accounting and Finance, 58(5), 1549–1580. https://doi.org/10.1111/acfi.12442
Smriti, N., & Das, N. (2018). The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI. Journal of Intellectual Capital, 19(5), 935–964. https://doi.org/10.1108/JIC-11-2017-0156
Sonnier, B. M., Hennig, C. J., Everett, J. O., & Raabe, W. A. (2012). Reporting of book-tax differences for financial and tax purposes: A case study. Journal of Accounting Education, 30(1), 58–79. https://doi.org/10.1016/j.jaccedu.2012.06.009
Sowaity, S. M. A. (2022). Does Intellectual Capital Efficiency Affect Earnings Quality? Evidence for Jordanian Listed Companies. Open Journal of Accounting, 11(02), 80–109. https://doi.org/10.4236/ojacct.2022.112006
Waluyo. (2016). The Relationship Between Book-Tax Differences and Earnings Growth Within Indonesian Manufacturing Firms. Research Journal of Finance and Accounting, 7(18), 127–133. https://iiste.org/Journals/index.php/RJFA/article/view/33300
Widiatmoko, J., & Indarti, M. G. K. (2019). Book Tax Differences, Operating Cash Flow, Leverage and Earning Persistence in Indonesia Manufacturing Companies. Jurnal Dinamika Akuntansi, 11(2), 151–159. https://doi.org/10.15294/jda.v11i2.20481
Widiatmoko, J., Indarti, M. G. K., & Agustin, C. A. (2020). Corporate Governance, Growth Opportunities dan Konservatisme Akuntansi: Bukti Empirik pada Perusahaan Manufaktur di Bursa Efek Indonesia. Jurnal Akuntansi Bisnis, 18(2), 236–249. http://journal.unika.ac.id/index.php/jab/article/view/3522/pdf
Widiatmoko, J., & Indarti, M. K. (2018). The Determinans Of Earnings Response Coefficient: An Empirical Study For The Real Estate And Property Companies Listed On The Indonesia Stock Exchange. Accounting Analysis Journal, 7(2), 135–143. https://doi.org/10.15294/aaj.v7i2.27321
Yasa, G. W., Astika, I. B. P., & Widiariani, N. M. A. (2019). The Influence Of Accounting Conservatism, IOS, And Good Corporate Governance On The Earnings Quality. Jurnal Ilmiah Akuntansi Dan Bisnis, 14(1), 86–94. https://doi.org/10.24843/JIAB.2019.v14.i01.p08
Yunita, P. A., & Suprasto, H. B. (2018). Pengaruh Konservatisme Dan Investment Opportunity Set (IOS) Terhadap Kualitas Laba dengan Kepemilikan Manajerial Sebagai Pemoderasi. E-Jurnal Akuntansi, 24(3), 1908–1937. https://doi.org/10.24843/eja.2018.v24.i03.p10
Downloads
Published
Issue
Section
License
Copyright (c) 2023 Maria Goreti Kentris Indarti Indarti, Jacobus Widiatmoko, Luluk Muhimatul Ifada
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
JIA (Jurnal Ilmiah Akuntansi) is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and greater citation of published work (See The Effect of Open Access).
1.png)
