The impact of inflation on firm value moderated by earnings quality in Indonesia

Nisrin Naziha Isma, Sutrisno T and Aulia Fuad Rahman
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Nisrin Naziha Isma: Brawijaya University
Sutrisno T: Accounting Department, Faculty of Economics and Business, Brawijaya University, Jl. Veteran, 65145, Malang, Indonesia
Aulia Fuad Rahman: Accounting Department, Faculty of Economics and Business, Brawijaya University, Jl. Veteran, 65145, Malang, Indonesia

International Journal of Research in Business and Social Science (2147-4478), 2023, vol. 12, issue 5, 217-222

Abstract: This study examines the effect of inflation on firm value in Indonesia and uses earnings quality to moderate inflation’s effect on firm value. The aim of this study is to discuss whether earnings quality can weaken the effect of inflation on firm value. The sample of this study is consumer firm listed on the Indonesia Stock Exchange (IDX) from 2016-2021 with a total of 696 firm-years. Using EViews 9 as a statistical software to test the hypothesis, the results show that inflation harms the firm value, and also proved that earnings quality can weaken the effect of inflation’s negative effect on firm value. The findings provide insight that earnings quality can be a solution to reduce the effect of inflation on firm value. Overall, the findings support the previous studies that suggest inflation is an external factor that affects the firm value and can be solved by maintaining the quality of earnings. Key Words: Firm Value, Inflation, Macroeconomic Factor, Earnings Quality, Earnings Persistence

Date: 2023
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