Influence of Investment Growth on Relation Between Equity Value and Earnings: Case from Indonesia
DOI:
https://doi.org/10.11113/sh.v2n3.436Keywords:
Investment growth, equity value, earningsAbstract
The objective of this paper is to investigate the influence of investment growth on the relation between equity value and earnings. Investment growth is measured by ratio capital expenditure to book value of assets. This model is developed by Kallapur and Trombley (1999). Sample in this study is all listed companies in Indonesia Stock Exchange from 2008 until 2011 appropriate to the sample criteria. This study uses regression analysis to test the hypothesis. The result of this research is consisten to alternate hypothesis that investment growth influences relation between equity value and earnings. The result of regression analysis shows that investment growth positively affects on the relation of equity value and earnings.Â
References
Achim, M., S. Achim, and S. Borlea. (2009). The Use of Earning Per Share in the Analysis of a Company’s Market Value. The Journal of American Academy of Business, 14, 344–349.
Ball, R., and P. Brown. (1968). An Empirical Evaluation Income Numbers. Journal of Accounting Research, (Autumn), 159–178.
Beaver, W. H. (1968). The Information Content of Annual Earnings Announcement. Empirical Research in Accounting, Selected Studies, 71–111.
Burgstahler, D., and I. Dichev. (1997). Earning, Adaptaion, and Equity Value. The Accounting Review, 73, 187–215.
Chen, P., and G. Zhang. (2007). How Do Accounting Variables Explain Stock Price Movement? Theory and Evidence. Journal of Accounting and Economics, 43, 219–244.
Collins, D., and S. P. Kothari. (1989). An Analysis of the Cross-sectional and Intertemporal Determinants of Earnings Response Coefficients. Journal of Accounting and Economics, 11, 143–181.
Collins, D., M. Pincus, and H. Xie. (1999). Equity Valuation and Negative Earnings: The Role of Book Value of Equity. The Accounting Review, 74, 29–61.
Deegan, C. (2000). Australian Financial Accounting. The MacGraw-Hill Companies.
Easton P., and T. Harris. (1991). Earnings as an Explanatory Variables for Returns. Journal of Accounting Research, 29, 19–36.
Gaver, J. J., and K. M. Gaver. (1995). Compensation Policy and the Investment Opportunity Set. Financial Management, Spring, 19–32.
Hao, S., Q. Jin., and G. Zhang. (2011). Invesment Growth and the Relation Between Equity Value, Earnings, and Equity Book Value. The Accounting Review, 86, 605–635.
Hasnawati, S. (2005). Dampak Set Peluang Investasi Terhadap Nilai Perusahaan Publik di Bursa Efek Jakarta. Journal Akadmeik Akuntansi Indonesia, 9, 117–126.
Higgins, R. C. (2003). Analysis for Financial Management. New York: McGraw-hill.
Jogiyanto, H. (2010). Metodologi Penelitian Bisnis: Salah Kaprah dan Pengalaman-Pengalaman. BPFE. Yogyakarta.
Jogiyanto, H. (2010). Teori Portofolio dan Analisis Investasi. BPFE. Yogyakarta.
Kim, O., S.C. Lim., T. Park. (2008). Measuring the Impact of Sales on Earnings and Equity Price. Rev Quant Finan Acc, 32, 145–168.
Kumalahadi. 2003. Pengaruh Pertumbuhan dan Hutang Terhadap Asosiasi Nilai Pasar–Laba dan Nilai Buku Ekuitas. Journal Akademek Akuntansi Indonesia, 7, 1–25.
Lev, B., Zarowin, P. (1999). The Boundaries of Financial Reporting and How to Extend them. Journal of Accounting Research, 37, 353–385.
Lo, K. (2008). Earnings Management and Earnings Quality. Journal of Accounting and Economics, 45, 350–357.
Miller, M., and F. Modigliani. (1961). Dividend Policy, Growth, and the Valuation of Shares. The Journal of Business, 34, 411–433.
Mukhophadyay, A., and S. AmirKhalkhaly. (2010). Profitability Performance and Firm Size-Growth Relationship. Journal of Business and Economic Research, 8, 121–126.
Nichols, D. C., and J. M. Whalen. (2004). How Do Earnings Number Relate to Stock Returns? A Review of Classic Accounting Research with Update Evidence. Accounting Horizon, 18, 263–286.
Ohlson, J. A. (1995). Earnings, Book Value, and Dividends Insecurity Valuation. Contemporary Accounting Research, 11, 661–687.
Oulton, N. (2007). Ex Post Versus Ex Ante Measures of the User Cost of Capital. Review of Income and Wealth, 53, 295–317.
Ross, S. A., R. W. Westerfield, J. Jaffe. (2011). Corporate Finance. McGraw-Hill/Irwin.
Samuelson, P. A. and Nordhaus, W. D. (1997). Makro Ekonomi. Jakarta: Erlangga.
Solomons, D. (1995). Criteria for Choosing and Accounting Model. Accounting Horizons, (March), 42–51.
Susilowati, Y., and T. Turyanto. (2011). Profitability and Solvability Ratio Reaction Signal Toward Stock Return Company. Dinamika Keuangan dan Perbankan, (Mei), 17–37.
Zhang, G. (2000). Accounting Infromation, Capital Investment Decisions, and Equity Valuation: Theory and Empirical Implication. Journal of Accounting Research, 38, 271–295.
