THE ROLE OF INVESTMENT OPPORTUNITY SETS (IOS)
IN THE RELATION BETWEEN CAPITAL EXPENDITURES AND
UNCERTAINTY OF FUTURE EARNINGS
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Institusion
Universitas Atma Jaya Yogyakarta
Author
Agustiani, Vini
Subject
Financial Accounting
Datestamp
2015-08-20 08:19:36
Abstract :
This study emphasizes on examining the moderating effect of Investment Opportunity Sets (IOS) in the relation between Capital Expenditures and Uncertainty of Future Earnings. I estimated that the IOS can mitigate the positive effect of capital expenditures to Uncertainty of future earnings. Since, the greater the IOS, the firm will have more option in valuable investments which have more certain return. Thus, by executing those valuable investments, firm can reduce its future earnings uncertainty that is caused by the capital investment. This study also can reveal the investment behavior of Indonesian firms, especially the manufacturing firms. By using 299 samples which are taken from 80 listed manufacturing firms from 2006- 2009, it found that the capital expenditures have positive effect towards the uncertainty of future earnings. Moreover, the IOS is proven to be able to mitigate that positive effect and make the effect become negative. Therefore, the manufacturing firms in Indonesia are proven to be able to execute the valuable opportunity and invest in the prospective investment
This study emphasizes on examining the moderating effect of Investment Opportunity Sets (IOS) in the relation between Capital Expenditures and Uncertainty of Future Earnings. I estimated that the IOS can mitigate the positive effect of capital expenditures to Uncertainty of future earnings. Since, the greater the IOS, the firm will have more option in valuable investments which have more certain return. Thus, by executing those valuable investments, firm can reduce its future earnings uncertainty that is caused by the capital investment. This study also can reveal the investment behavior of Indonesian firms, especially the manufacturing firms. By using 299 samples which are taken from 80 listed manufacturing firms from 2006- 2009, it found that the capital expenditures have positive effect towards the uncertainty of future earnings. Moreover, the IOS is proven to be able to mitigate that positive effect and make the effect become negative. Therefore, the manufacturing firms in Indonesia are proven to be able to execute the valuable opportunity and invest in the prospective investment
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