Title: THE EFFECT OF EARNINGS QUALITY, POLITICAL CONNECTIONS, AND GOVERNANCE ON CASH HOLDINGS

Authors: AMALIA HASTA INSANI

Affiliations : Master of Accounting Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia

Publisher: Universitas Airlangga

Abstract

This study aims to examine the effect of earnings quality, political connections, and corporate governance on cash holdings. This study uses a sample of companies from all sectors except financial sector companies listed on the Indonesia Stock Exchange for the 2015-2017 period. The total sample in this study is 369 for 2015, 374 for 2016, and 377 for 2017 with 1,120 observations. The analysis technique used in this study is multiple linear regression analysis with the STATA 13.0 program. Earnings quality is measured by the total current accrual formula, political connections are measured using a dummy variable with measurements of government political connections and board political connections are measured using a ratio, while governance uses an index. While cash holdings use the logarithm of cash divided by net assets. The results of the study are (1) earnings quality has a negative effect on cash holdings. (2) Companies that have political connections with the government have a positive effect on cash holdings. (3) Politically connected boards of directors have no effect on cash holdings. (4) Governance has a positive effect on cash holdings.

Keywords: Earnings quality, Political connections, Corporate governance, Cash Holdings

Sources: http://repository.unair.ac.id/87239/