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The Effect Of Accrual Market Pricing, Foreign Ownership, Financial Distress And Leverage To The Integrity Of Financial Statements

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  • Melinda Malau
  • Etty Murwaningsari

Abstract

The purpose of this research is to analyse the effect of market pricing accrual, foreign ownership, financial distress, and leverage on the integrity of financial statements, using multiple regression analysis and logistic regression. The research uses 363 samples, comprising the data of 121 manufacturing companies listed on the Indonesia Stock Exchange over three years, from 2013 to 2015. The results show that market pricing accrual has a significant positive influence on the integrity of financial statements, while a company’s leverage has a significant negative influence. Bankruptcy and foreign ownership have no significant effect on financial statements’ integrity. Based on the research results, when assessing the integrity of financial statements a company’s stakeholders should pay most attention to market pricing accrual and the company’s leverage. In addition, regulators should produce standards or guidelines governing the company’s remit and responsibilities regarding financial statements.

Suggested Citation

  • Melinda Malau & Etty Murwaningsari, 2018. "The Effect Of Accrual Market Pricing, Foreign Ownership, Financial Distress And Leverage To The Integrity Of Financial Statements," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 63(217), pages 129-140, April – J.
    • Handle: RePEc:beo:journl:v:63:y:2018:i:217:p:129-140
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    References listed on IDEAS

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    1. José V. Frias‐Aceituno & Lazaro Rodriguez‐Ariza & I.M Garcia‐Sanchez, 2013. "The Role of the Board in the Dissemination of Integrated Corporate Social Reporting," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(4), pages 219-233, July.
    2. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    3. Guay, WR & Kothari, SP & Watts, RL, 1996. "A market-based evaluation of discretionary accrual models," Journal of Accounting Research, Wiley Blackwell, vol. 34, pages 83-105.
    4. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
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    Cited by:

    1. Asyrofa Rahmi & Hung-Yuan Lu & Deron Liang & Dinda Novitasari & Chih-Fong Tsai, 2023. "Role of Comprehensive Income in Predicting Bankruptcy," Computational Economics, Springer;Society for Computational Economics, vol. 62(2), pages 689-720, August.
    2. Niluthpaul Sarker & S. M. Khaled Hossain, 2023. "Ownership Structure and Financial Distress: Investigating the Moderating Effect of Audit Quality," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 187-202, November.

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    More about this item

    Keywords

    market pricing accrual; foreign ownership; financial distress; leverage; integrity of financial statements;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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