Analysis of Factors Affecting Profit Management and Corporate Value Kompas 100 Index Listed on the Indonesia Stock Exchange for the 2012 to 2014 Period
Introduction
The Indonesia Stock Exchange (IDX) has been a significant platform for companies to raise capital and expand their business operations. The Kompas 100 index, which is a benchmark for the Indonesian stock market, has been a crucial indicator of the country's economic performance. However, the management of profit and company value is a complex phenomenon that is influenced by various factors. This study aims to examine the effect of several factors on profit and company value management simultaneously and partially, as well as the influence of earnings management on company value on Kompas 100 index companies listed on the IDX for the 2012-2014 period.
Methodology
The sampling method used in this study was the proportional sampling stratified random technique, involving 80 companies per year for three years, producing 240 observation samples. The data collected were analyzed using multiple regression analysis to examine the effect of several factors on profit and company value management simultaneously and partially.
Results
The results of this study showed that simultaneously, institutional ownership, managerial ownership, Independent Commissioner, Audit Committee, Board of Directors, Net Profit Margin, Leverage, Company Size, Free Cash Flow, and Growth Opportunities significantly affect profit management and corporate value. Partially, only independent commissioners, net profit margins, free cash flows, and growth opportunities that affect earnings management. Meanwhile, institutional ownership, independent commissioner, leverage, company size, and free cash flow significantly affect the company's value.
Factors Affecting Profit Management
Independent Commissioner
The existence of a strong and active independent commissioner in supervision can reduce company opportunities to carry out earnings management. Independent commissioners play a crucial role in ensuring that companies operate in a transparent and accountable manner.
Net Profit Margin
Low net profit margin can encourage companies to manipulate profits to achieve profitability targets. Companies with low net profit margins may be tempted to engage in earnings management practices to meet their financial targets.
Free Cash Flow
Companies with large free cash flows tend to have more flexibility in manipulating profits to achieve certain goals. Free cash flow is a critical factor in determining a company's ability to generate profits and pay dividends.
Growth Opportunities
Companies with high growth opportunities may be more tempted to carry out earnings management to increase company value and attract investors. Growth opportunities can be a significant driver of earnings management practices.
Factors Affecting Company Value
Institutional Ownership
High institutional ownership can increase company value because institutions usually have the ability and motivation to monitor management performance and encourage good corporate governance.
Independent Commissioner
Effective independent commissioners can increase company transparency and accountability, which in turn can increase company value.
Leverage
High leverage can increase the company's financial risk, which can reduce the company's value in the eyes of investors.
Company Size
Large companies tend to have access to wider resources and opportunities, which can increase company value.
Free Cash Flow
High free cash flow shows the company's ability to generate profits and pay dividends, which can increase company value.
Role of Profit Management in Company Value
Research shows that earnings management can mediate the effect of several factors on company value. That is, earnings management can be a determining factor in the relationship between factors such as institutional ownership, managerial ownership, and audit committee with company value.
Practical Implications
Increasing Corporate Governance
It is essential to encourage improvement in corporate governance, especially the role of independent commissioners, audit committees, and board of directors in minimizing earnings management practices.
Transparency and Accountability
Increasing the transparency and accountability of the company through accurate and timely information disclosure can build investor confidence and increase company value.
Focus on Free Cash Flow
Companies need to focus on strategies that can produce strong free cash flows, which in turn will increase the company's value.
Conclusion
The results of this study indicate that earnings management is a complex phenomenon and is influenced by various factors. It is essential for investors and stakeholders to understand the factors that can affect earnings management and company value. Thus, they can make better investment decisions and encourage good corporate governance.
Limitations of the Study
This study has several limitations. Firstly, the study only examined the effect of several factors on profit and company value management simultaneously and partially. Secondly, the study only focused on Kompas 100 index companies listed on the IDX for the 2012-2014 period. Finally, the study did not examine the effect of other factors that may influence earnings management and company value.
Future Research Directions
Future research should examine the effect of other factors that may influence earnings management and company value. Additionally, future research should focus on examining the effect of earnings management on company value in other industries and countries.
References
[1] [Author's Name]. (Year). Title of the article. Journal Name, Volume(Issue), pp-pp.
[2] [Author's Name]. (Year). Title of the article. Journal Name, Volume(Issue), pp-pp.
[3] [Author's Name]. (Year). Title of the article. Journal Name, Volume(Issue), pp-pp.
Note: The references provided are fictional and should be replaced with actual references to the sources cited in the study.Q&A: Analysis of Factors Affecting Profit Management and Corporate Value Kompas 100 Index Listed on the Indonesia Stock Exchange for the 2012 to 2014 Period
Introduction
In our previous article, we discussed the analysis of factors affecting profit management and corporate value Kompas 100 index listed on the Indonesia Stock Exchange for the 2012 to 2014 period. In this article, we will provide a Q&A section to further clarify the findings and implications of the study.
Q&A
Q: What are the key factors that affect profit management and corporate value?
A: The key factors that affect profit management and corporate value are institutional ownership, managerial ownership, Independent Commissioner, Audit Committee, Board of Directors, Net Profit Margin, Leverage, Company Size, Free Cash Flow, and Growth Opportunities.
Q: How do institutional ownership and managerial ownership affect profit management and corporate value?
A: Institutional ownership and managerial ownership have a significant impact on profit management and corporate value. Institutional ownership can increase company value by monitoring management performance and encouraging good corporate governance. Managerial ownership can also affect profit management and corporate value by influencing management decisions and behavior.
Q: What is the role of Independent Commissioner in profit management and corporate value?
A: Independent Commissioner plays a crucial role in ensuring that companies operate in a transparent and accountable manner. Effective Independent Commissioner can increase company transparency and accountability, which in turn can increase company value.
Q: How does Net Profit Margin affect profit management and corporate value?
A: Low Net Profit Margin can encourage companies to manipulate profits to achieve profitability targets. Companies with low Net Profit Margin may be tempted to engage in earnings management practices to meet their financial targets.
Q: What is the impact of Leverage on corporate value?
A: High Leverage can increase the company's financial risk, which can reduce the company's value in the eyes of investors.
Q: How does Company Size affect corporate value?
A: Large companies tend to have access to wider resources and opportunities, which can increase company value.
Q: What is the role of Free Cash Flow in profit management and corporate value?
A: Free Cash Flow is a critical factor in determining a company's ability to generate profits and pay dividends. High Free Cash Flow shows the company's ability to generate profits and pay dividends, which can increase company value.
Q: How does Growth Opportunities affect profit management and corporate value?
A: Companies with high growth opportunities may be more tempted to carry out earnings management to increase company value and attract investors.
Q: What are the practical implications of the study?
A: The study has several practical implications. Firstly, it is essential to encourage improvement in corporate governance, especially the role of Independent Commissioner, Audit Committee, and Board of Directors in minimizing earnings management practices. Secondly, increasing transparency and accountability through accurate and timely information disclosure can build investor confidence and increase company value. Finally, companies need to focus on strategies that can produce strong Free Cash Flows, which in turn will increase the company's value.
Q: What are the limitations of the study?
A: The study has several limitations. Firstly, the study only examined the effect of several factors on profit and company value management simultaneously and partially. Secondly, the study only focused on Kompas 100 index companies listed on the IDX for the 2012-2014 period. Finally, the study did not examine the effect of other factors that may influence earnings management and company value.
Q: What are the future research directions?
A: Future research should examine the effect of other factors that may influence earnings management and company value. Additionally, future research should focus on examining the effect of earnings management on company value in other industries and countries.
Conclusion
The Q&A section provides further clarification on the findings and implications of the study. The study highlights the importance of corporate governance, transparency, and accountability in profit management and corporate value. The study also emphasizes the need for companies to focus on strategies that can produce strong Free Cash Flows, which in turn will increase the company's value.
References
[1] [Author's Name]. (Year). Title of the article. Journal Name, Volume(Issue), pp-pp.
[2] [Author's Name]. (Year). Title of the article. Journal Name, Volume(Issue), pp-pp.
[3] [Author's Name]. (Year). Title of the article. Journal Name, Volume(Issue), pp-pp.
Note: The references provided are fictional and should be replaced with actual references to the sources cited in the study.