THE EFFECT OF OPERATING CASH FLOW VOLATILITY, AMOUNT OF ACCRUALS, AND LEVEL OF DEBT TO THE EARNINGS PERSISTENCE

Abstract

The overall economic downturn in 2020-2021 has huge impact on many companies, to an extend that many companies was failed to maintain their earnings and some of them have to closed their business. However, there are companies in the financial sector that successfully maintaining, and even raising their earnings during the years. The aim of this research is to determine whether the operating cash flow volatility, the amount of accruals, and the level of debt had an impact on earnings persistence in financial sector companies. This research uses signaling theory, with the earnings persistence variable as the dependent variable, operating cash flow volatility, amount of accruals, and the level of debt as independent variables, and firm size as the controlling variable. The sampling method used was purposive sampling, with Financial Reports of Financial Sector Companies on the Indonesian Stock Exchange as data source from year 2018-2022. This research also used multiple linear regression as data processing method with the SPSS application. The results of this research is according to partial test, operating cash flow volatility and the amount of accruals have no effect on earnings persistence, while the level of debt have a negative effect on profit persistence.