Effect of Earnings Management, Liquidity Ratio, Solvency Ratio and Ratio Profitability of Bond Ratings in Manufacturing: (Case Study Sub-Sector Property and Real Estate Sector Companies listed on the Indonesia Stock Exchange (IDX))

Syarifah Syarifah

doi:10.46336/ijbesd.v2i2.144

Effect of Earnings Management, Liquidity Ratio, Solvency Ratio and Ratio Profitability of Bond Ratings in Manufacturing: (Case Study Sub-Sector Property and Real Estate Sector Companies listed on the Indonesia Stock Exchange (IDX))

Syarifah Syarifah

Abstract

This study aims to analyze the effect of earnings management, liquidity ratios, solvency ratios, and profitability ratios on bond ratings. The population of this study is 45 companies listed on the Indonesia Stock Exchange in the property and real estate sector during the 2017-2020 period,by processing data using Eviews Version 9. The sampling technique used was purposive sampling method and 4 companies were selected as samples. This study uses quantitative descriptive methods and multiple regression tests to determine the relationship between variables. Based on the results of the study prove that earnings management, liquidity ratios, solvency ratios, and profitability ratios have an effect on simultaneously on bond ratings. earnings management partially has a negative effect on bond ratings, liquidity ratio partially has a positive and significant on bond ratings, solvency ratio and profitability ratio partially has negative on bond ratings. The obligations of a property and real estate sector company given by a depository are important for investors to know because investors will know the rating of the company that is eligible or not to invest.

Keywords

Bond investment, management, bond investment, stock exchange

Full Text:

PDF

References

Bahtera, N. T. (2017). The Impact of Bond Rating Announcement on Companies Listed Stock Returns: Evidence from Indonesia. TIJAB (The International Journal of Applied Business), 1(2), 75-88.

Baraja, L., and Yosya, E. A. (2019). Analysis the impact of liquidity, profitability, activity and solvency ratio on change in earnings. Indonesian Management and Accounting Research, 17(1), 1-17.

Bogdan, S., Bareša, S., and Ivanović, S. (2012). Measuring liquidity on stock market: Impact on liquidity ratio. Tourism and hospitality management, 18(2), 183-193.

Dewi, M. S., and Utami, E. M. (2020). The influence of profitability and liquidity to bond rating and the impact on the bond yield. International Journal of Research in Business and Social Science (2147-4478), 9(4), 214-219.

Fan, Y., Jiang, Y., Zhang, X., and Zhou, Y. (2019). Women on boards and bank earnings management: From zero to hero. Journal of Banking & Finance, 107, 105607.

Kliestik, T., Valaskova, K., Nica, E., Kovacova, M., and Lazaroiu, G. (2020). Advanced methods of earnings management: Monotonic trends and change-points under spotlight in the Visegrad countries. Oeconomia Copernicana, 11(2), 371-400.

Miiller, D. L., and Martinez, A. L. (2016). Book-tax difference, earnings management and bond ratings in the Brazilian Market. Revista Universo Contábil, 12(3), 91-109.

Ni’mah, A., Laila, N., Rusmita, S. A., and Cahyono, E. F. (2020). Determinants of corporate bond and sukuk ratings in Indonesia. Journal of Islamic Monetary Economics and Finance, 6(3), 689-712.

Nurwulandari, A. (2021). The Effect of the Bank Indonesia Interest Rate, Exchange Rate, and Bond Rating against Bond Yield: Registered Corporate Bonds Issuing Company on the Indonesia Stock Exchange. International Journal of Science and Society, 3(2), 222-231.

Pramanik, S., Johnson, V. E., and Bhattacharya, A. (2021). A modified sequential probability ratio test. Journal of Mathematical Psychology, 101, 102505.

Prodanova, N. A., Trofimova, L. B., Adamenko, A. A., Erzinkyan, E. A., Savina, N. V., and Korshunova, L. N. (2019). Methodology for assessing control in the formation of financial statements of a consolidated business. International Journal of Recent Technology and Engineering, 8(1), 2696-2702.

Sacarin, M. (2017). IFRS 16 “Leases”–consequences on the financial statements and financial indicators. The Audit Financiar journal, 15(145), 114-114.

Sari, R. K., Nurlaela, S., and Titisari, K. H. (2018, August). The Effect of Liquidity Ratio, Profitability Ratio, Company Size, and Leverage on Bond Rating in Construction and Real Estate Company. In PROCEEDING ICTESS (Internasional Conference on Technology, Education and Social Sciences).

Sunarjanto, N., Agus and Daniel, T. (2013). Capabilities And Corporate Governance Financial Ratios Predicting Bond Rating In Consumer Goods Company. Journal of Finance and Banking, 17(2), 230-242.

Tan, S. C. (2018). Empirical Evidence of The Role of Accounting Policy on Bond Rating to Financial Companies Listed in Indonesia Stock Exchange. Media Riset Akuntansi, Auditing & Informasi, 18(1), 35-48.

Yung, K., and Root, A. (2019). Policy uncertainty and earnings management: International evidence. Journal of Business Research, 100, 255-267.

Yusuf, A., and Prasetyo, A. D. (2019). The effect of inflation, US bond yield, and exchange rate on Indonesia bond yield. Jurnal Perspektif Pembiayaan Dan Pembangunan Daerah, 6(6), 649-656.

DOI: https://doi.org/10.46336/ijbesd.v2i2.144