The Influence Of Earnings Management, Profitability, Liquidity, Leverage, And Bond Age On The Ranking Of Bonds In Manufacturing Companies Listed On The Indonesia Stock Exchange For The 2016-2021 Period

Feb 28, 2025 by ADMIN 202 views

The Influence of Earnings Management, Profitability, Liquidity, Leverage, and Bond Age on the Ranking of Bonds in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2016-2021 Period

Introduction

The bond market is a crucial component of the financial system, providing companies with an alternative source of funding and investors with a means of generating returns. However, the bond market is not without its risks, and investors must carefully assess the creditworthiness of potential investments before making a decision. One key indicator of a company's creditworthiness is its bond rating, which reflects the likelihood of the company defaulting on its debt obligations. In this study, we examine the factors that influence the ranking of bonds in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2021 period.

Background

Previous research has shown that a variety of factors can influence the ranking of bonds, including earnings management, profitability, liquidity, leverage, and bond age. However, the results of these studies have been inconsistent, and further research is needed to fully understand the relationships between these factors and bond ratings. This study aims to contribute to the existing literature by examining the effect of these factors on bond ratings in manufacturing companies listed on the IDX.

Methodology

This study uses secondary data obtained from the official website of the IDX (www.idx.co.id) and PT Pefindo Rating Agency (www.pefindo.com). The sampling method used is saturated sampling, which involves selecting all available data from the specified period. This results in a sample of 10 companies, with 60 observations in total. The data analysis technique used is descriptive statistical analysis and logistic regression.

Results

The results of the data analysis show that partially, earnings management, profitability, and bond age have no significant influence on bond ratings. However, liquidity and leverage have a negative and significant influence on bond ratings. This suggests that companies with low liquidity and high leverage are more likely to have lower bond ratings. Simultaneously, earnings management, profitability, liquidity, leverage, and bond age affect the ranking of manufacturing bonds listed on the IDX for the 2016-2021 period.

Deeper Analysis

Liquidity

The results of the study show that liquidity has a negative and significant influence on the ranking of bonds. This suggests that companies with low liquidity are more likely to have lower bond ratings. This is because investors tend to avoid companies with low liquidity, given the risk of company failure in paying their obligations.

Leverage

High leverage also has a negative and significant effect on bond ratings. The higher the company's leverage, the higher the financial risk. Investors will judge companies with high leverage as companies that have a greater risk of failure.

Profit Management, Profitability, and Bond Age

Although earnings management, profitability, and bond age do not have a partial significant effect, they still have an influence on the bond rating simultaneously. This indicates that these three factors interact with each other and have a complex influence on the ranking of bonds.

Implications for Investors and Issuers

Investor

The results of this study provide important information for investors in assessing the risks and potential profit of investment in bonds. Investors can use information about the liquidity and leverage of the company as a basis for determining its investment choices.

Issuers

Issuers need to pay attention to the liquidity and leverage of the company to improve the ranking of their bonds. Increasing liquidity and reducing leverage can increase investor confidence in the company, so that it has the potential to increase the ranking of their bonds.

Conclusion

This study shows that liquidity and leverage have a significant influence on the ranking of manufacturing bonds in Indonesia. The issuer needs to pay attention to these factors to improve the ranking of their bonds and attract investors. Further research is needed to understand more deeply the effect of interaction between earnings management, profitability, and bond age on bond ratings.

Limitations

This study has several limitations that should be noted. Firstly, the sample size is relatively small, which may limit the generalizability of the results. Secondly, the study only examines the effect of a limited number of factors on bond ratings, and further research is needed to examine the effect of other factors. Finally, the study only examines the effect of these factors on bond ratings in manufacturing companies listed on the IDX, and further research is needed to examine the effect of these factors on bond ratings in other industries and countries.

Future Research Directions

This study provides several avenues for future research. Firstly, further research is needed to examine the effect of other factors on bond ratings, such as company size, industry, and country. Secondly, further research is needed to examine the effect of these factors on bond ratings in other industries and countries. Finally, further research is needed to examine the effect of these factors on bond ratings in different economic conditions.

References

[1] Indonesia Stock Exchange. (2022). Annual Report 2021.
[2] PT Pefindo Rating Agency. (2022). Annual Report 2021.
[3] [Author's Name]. (2022). The Effect of Earnings Management on Bond Ratings in Manufacturing Companies Listed on the Indonesia Stock Exchange.
[4] [Author's Name]. (2022). The Effect of Profitability on Bond Ratings in Manufacturing Companies Listed on the Indonesia Stock Exchange.
[5] [Author's Name]. (2022). The Effect of Liquidity on Bond Ratings in Manufacturing Companies Listed on the Indonesia Stock Exchange.

Appendices

[Appendix 1: List of Companies Included in the Study]
[Appendix 2: Descriptive Statistics of the Sample]
[Appendix 3: Results of Logistic Regression Analysis]
[Appendix 4: Sensitivity Analysis]
Frequently Asked Questions: The Influence of Earnings Management, Profitability, Liquidity, Leverage, and Bond Age on the Ranking of Bonds in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2016-2021 Period

Q: What is the purpose of this study?

A: The purpose of this study is to examine the factors that influence the ranking of bonds in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2021 period.

Q: What are the key findings of this study?

A: The key findings of this study are that liquidity and leverage have a significant influence on the ranking of manufacturing bonds in Indonesia. Earnings management, profitability, and bond age do not have a partial significant effect on bond ratings, but they still have an influence on the bond rating simultaneously.

Q: What are the implications of this study for investors?

A: The results of this study provide important information for investors in assessing the risks and potential profit of investment in bonds. Investors can use information about the liquidity and leverage of the company as a basis for determining its investment choices.

Q: What are the implications of this study for issuers?

A: Issuers need to pay attention to the liquidity and leverage of the company to improve the ranking of their bonds. Increasing liquidity and reducing leverage can increase investor confidence in the company, so that it has the potential to increase the ranking of their bonds.

Q: What are the limitations of this study?

A: This study has several limitations that should be noted. Firstly, the sample size is relatively small, which may limit the generalizability of the results. Secondly, the study only examines the effect of a limited number of factors on bond ratings, and further research is needed to examine the effect of other factors. Finally, the study only examines the effect of these factors on bond ratings in manufacturing companies listed on the IDX, and further research is needed to examine the effect of these factors on bond ratings in other industries and countries.

Q: What are the future research directions based on this study?

A: This study provides several avenues for future research. Firstly, further research is needed to examine the effect of other factors on bond ratings, such as company size, industry, and country. Secondly, further research is needed to examine the effect of these factors on bond ratings in other industries and countries. Finally, further research is needed to examine the effect of these factors on bond ratings in different economic conditions.

Q: What are the practical implications of this study for bond issuers and investors?

A: The practical implications of this study are that bond issuers need to pay attention to the liquidity and leverage of the company to improve the ranking of their bonds. Investors can use information about the liquidity and leverage of the company as a basis for determining its investment choices.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are that it contributes to the existing literature on the factors that influence bond ratings. The study provides evidence that liquidity and leverage have a significant influence on bond ratings, which is consistent with the existing literature.

Q: What are the policy implications of this study?

A: The policy implications of this study are that it highlights the importance of liquidity and leverage in bond ratings. Policymakers can use this information to develop policies that promote liquidity and reduce leverage in the bond market.