The Role of Corporate Governance to the Relationship Between Income Smoothing, Dividend, Growth and Earnings Informativeness

The objective of this empirical study is to analyse the influence of dividend policy, company growth, and income smoothing to earnings informativeness on manufacturing companies listed on Indonesia Stock Exchange in 2016 – 2018. Earnings informativeness represents market reaction of price change to company’s unexpected earnings which is proxied by earnings response coefficient. This study also uses corporate governance measured by the ASEAN Corporate Governance Scorecard as moderating variable. The samples used in this research were 129 originating observations from 47 manufacturing companies listed on the Indonesia Stock Exchange during period of 2016 to 2018. The results show that income smoothing has a positive influence to earnings response coefficient while dividend policy, and company growth do not have positive influences to earnings response coefficient. CG strengthens the influence of income smoothing to earnings response coefficient. However, CG does not moderate the influence of dividend policy and company growth to earnings response coefficient. Keywords—corporate governance, dividend policy, earnings informativeness, company growth, income smoothing