Influence of Investment Opportunity Set, Financial Leverage and Firm Size on Real Activity Manipulation and Its Implication on Stock Return (Study on Manufacturing Company Listed in Indonesia Stock Exchange)

Abstract

This study is aimed to examine the influence of investment opportunity set, financial leverage and firm size on real activity manipulation and its implication on stock return, either simultaneously or partially. The research data collection is conducted by employing secondary reports of audited financial reports of manufacturing companies listed in Indonesian Stock Exchange The unit of analysis used in is the manufacturing companies listed in Indonesia Stock Exchange within the period of 2010-2014. The unit of observation is selected by using purposive sampling method of which it employs 380 observations of companies. From those numbers, it is further selected of companies that have  real activity manipulation of which is 206 oervations Hence the final number of observations selected by using purposive sampling method that  indicated real activity manipulation amount is 174 companies. The analytical method used in this research is path analysis. The results showed that (1) investment opportunity set, financial leverage and firm size have a simultaneously  significant influence on real activity manipulation (2) investment opportunity set has no significant influence  on real activity manipulation, (3) financial leverage has a significant influence  on real activity manipulation, (4) firm size has no significant  influence on real activity manipulation, (5) investment opportunity set, financial leverage, firm size and real activity manipulation have a simultaneously  significant influence on stock return, (6) investment opportunity set has a significant influence  on stock return, (7) financial leverage has no significant influence on stock return, (8) firm size has no influence on stock return, (9) real activity manipulation has no significant influence on stock return, (10) real activity manipulation does not mediate the influence of investment opportunity set on stock return, (11) real activity manipulation does not mediate the influence of financial leverage on stock return, (12) real activity manipulation does not mediate the influence of firm size on stock return.

Keywords: Investment Opportunity Set, Financial Leverage, Firm Size, Real Activity Manipulation, Stock Return.