Accruals and Asset Valuation in Emerging Markets: Evidence from the Indonesia Stock Exchange (IDX)

Robert Jao; Marselinus Asri; Ana Mardiana

doi:10.70716/ecoma.v4i1.427

Authors

Robert Jao Accounting Study Program, Universitas Atma Jaya Makassar
Marselinus Asri Accounting Study Program, Universitas Atma Jaya Makassar
Ana Mardiana Accounting Study Program, Universitas Atma Jaya Makassar

DOI:

https://doi.org/10.70716/ecoma.v4i1.427

Keywords:

Idiosyncratic Risk, Asset Pricing, Financial Accrua, Accrual Anomaly, Financial Market

Abstract

This study examines the impact of idiosyncratic risk, current operating accruals, non-current operating accruals, financial accruals, and accrual anomalies on asset pricing. A regression analysis is conducted with asset prices as the dependent variable and idiosyncratic risk, current operating accruals, non-current operating accruals, financial accruals, and accrual anomalies as independent variables. The analysis reports coefficients, standard errors, t-statistics, and significance levels for each predictor. The results show that idiosyncratic risk (β = 0.518, p < 0.001) and financial accruals (β = 0.584, p < 0.001) have a significant positive effect on asset prices. In contrast, accrual anomalies (β = -0.092, p = 0.002) have a significant negative effect. In contrast, current operating accruals and non-current operating accruals do not show significant effects. These findings indicate that idiosyncratic risk and financial accruals are key determinants of asset pricing. In contrast, accrual anomalies negatively influence asset prices, and neither current nor non-current operating accruals are significant predictors in the model. The results suggest that investors and policymakers should consider idiosyncratic risk and financial accruals when evaluating asset price performance. In contrast, the negative impact of accrual anomalies underscores the need to assess accrual-based measures in financial analysis carefully. This study emphasizes the roles of idiosyncratic risk and financial accruals in asset pricing in the Indonesian capital market. It provides insights for investors, businesses, policymakers, and academics to develop investment strategies, corporate practices, and policy decisions, particularly in emerging markets.

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