Corporate characteristics and future earnings informativeness: the moderating role of information asymmetry in Indonesia
DOI:
https://doi.org/10.38035/dijemss.v7i5.6925Keywords:
Future Earnings Response Coefficient, Corporate Governance, Corporate Social Responsibility, Foreign Ownership, Income Smoothing, Asymmetric Information.Abstract
This study examines the effect of income smoothing, foreign ownership, corporate governance, and corporate social responsibility (CSR) on the Future Earnings Response Coefficient (FERC), with asymmetric information serving as a moderating variable. The study investigates how financial and non-financial corporate characteristics influence earnings informativeness in an emerging market context during the post-COVID-19 recovery period. The sample consists of 55 companies listed on the Indonesia Stock Exchange (IDX) during 2020–2022, resulting in 165 firm-year observations. FERC was estimated using the Collins et al. (1994) framework, while hypothesis testing was conducted using panel regression analysis with the Random Effect Model (REM). Corporate governance was measured using the ASEAN Corporate Governance Scorecard (ACGS), CSR disclosure was measured using a GRI-based disclosure index, and asymmetric information was proxied by bid-ask spread. The findings indicate that corporate governance positively affects FERC, while foreign ownership and CSR disclosure negatively affect FERC. Income smoothing does not significantly affect FERC. Furthermore, asymmetric information weakens the influence of corporate governance on FERC and strengthens the effect of CSR disclosure on FERC, whereas its moderating role on income smoothing and foreign ownership is not significant. The model explains approximately 25.4% of the variation in FERC (R² = 0.254). These findings suggest that earnings informativeness in emerging markets is influenced not only by financial reporting quality but also by governance mechanisms, disclosure credibility, and market information conditions. The study contributes to the FERC literature by integrating financial and non-financial determinants of earnings informativeness within a moderated framework and provides evidence from an emerging market setting using a two-stage FERC estimation approach.
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