THE EFFECT OF EARNINGS SMOOTHING, COMPANY SIZE, LEVERAGE, AND PROFITABILITY ON MARKET REACTION IN LQ45 INDEX STOCKS LISTED ON THE INDONESIA STOCK EXCHANGE (LQ45 CASE STUDY)

Abstract

This research was conducted on LQ45 Index stocks listed on the Indonesia Stock Exchange (BEI) for the 2019-2023 period. The variable used to measure earnings smoothing is the earnings smoothing index, the company size variable is measured by (SIZE), the leverage variable is measured by (DER), and the profitability variable is measured by (ROA). The purpose of this study was to determine the effect of earnings smoothing, company size, leverage, and profitability on market reactions proxied by stock returns on annual financial reports and profit/loss statements in LQ45 Index stock companies. The population of this study is the LQ45 Index stock businesses listed on the Indonesia Stock Exchange (IDX) for the 2019–2023 timeframe comprise the study's population 45 businesses in all. The research sample Purposive sampling was used to gather the research sample, and 25 businesses satisfied the requirements. Multiple linear regression is the analysis method that is employed, analysis, hypothesis testing, and classical assumption tests which include normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. The conclusion of this study shows that the independent variables of earnings smoothing,  leverage  have  a significant positive effect on market reaction, while the independent variable company size, profitability does not. Has a significant effect on market reaction.