| Summary: | 碩士 === 國立雲林科技大學 === 財務金融系 === 106 === Abstract
Stock price has become the indicator of management in maximization of stockholder wealth. By increasing the stock price, it could indicate an increase in stockholder wealth. However, some managers tend to manipulate the earnings in order to attract the investor by presenting the good earnings. The implementation of real earnings management (REM) has been shifted after the Enron scandal and the launching of Sarbanes Oxley Act. Furthermore, since the 2008-2009 global financial crisis several research discuss whether the Islamic finance could be act as an alternative in global financial system. Therefore, this study examines the effect of REM on stock return and take evidence from Indonesia as a development country which have the huge muslim population. Several tests conduct by using sample of 290 firm-year observations listed in LQ45 index and 205 firm-year observations listed in Jakarta Islamic Index from 2012 to 2016. The results show some empirical evidence that REM are not significantly affect the stock return. Moreover, the Islamic finance could reduce the level of REM proxies, which are abnormal cash flow from operations and abnormal production costs. However, it could not reduce the level of the other REM proxy which is abnormal discretionary expenses.
Keywords: Stock return, real earnings management, Islamic finance.
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