PENGARUH STRUKTUR MODAL DAN KUALITAS AUDIT TERHADAP EARNING RESPONSE COEFFICIENT

Abstract

Financial reports information has big influences toward the decisions made by investor when they have to make investment decisions, especially the information about earnings. This information will affect investors in making predictions on the level of return that would be obtained in the future. The relationship between earnings with stock returns can be measured by the Earnings Response Coefficient (ERC). The objective of this study is to determine the effect of capital structure and quality audit of ERC. This study used unexpected earnings (UE), financial leverage (LEV), and the size of the auditor (KAP) as dependent variable and cumulative abnormal return (CAR) as independent variable. Samples used in this study were manufacturing firms listed on the Stock Exchange from 2007 to 2010. The hypothesis was tested using multiple linear regressions on LEV and KAP separately. The results indicate that LEV and KAP had no significant effect to ERC. It is because there are tendency of investors to more focus on rational information related to the fundamental aspects of the company for the measuring of corporate performance. The increase of audit regulation makes no difference in assessment of audit quality standard for KAP big four and KAP non big four.