Conclusion Managerial Implication` CONCLUSION

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CHAPTER V CONCLUSION

A. Conclusion

Based on the result of the data analysis in chapter 4, in this chapter the researcher has made conclusions as follows: 1. There was earnings management in the companies that did IPO in Indonesia Stock Exchange in period of two years prior to the IPO. 2. There was no earnings management in the companies, which did IPO in Indonesia Stock Exchange in period of one year prior to the IPO. 3. There was no earnings management in the companies, which did IPO in Indonesia Stock Exchange in period of IPO. 4. There was earnings management in the companies that did IPO in Indonesia Stock Exchange in period of one year after the IPO. 5. There was earnings management in the companies that did IPO in Indonesia Stock Exchange in period of two years after the IPO. 6. Earnings Management has no effect on long-term performance of stock.

B. Managerial Implication`

Prospectus is the only source that is used by investor for deciding to invest in company that did IPO. Due to prospectus is the only source used by 47 investor, so that there will be high asymmetry information between management and investor. This asymmetry information happens because the management gets more information than the external side about the condition of the company. It can give opportunity to the management to do the earnings management. Earnings management can give a positive signal toward market about the condition of the company. This positive signal is showed in the reported performance in prospectus. However, this positive signal cannot be hold by the management in the long-term, which show in the decreasing of company’s performance Teoh et al., 1998. The result of this research shown that company which did earnings management in the period of two years before, one year after and two years after IPO, while in one year before IPO and in the period around IPO company is not do the earnings management. Based on those things, it shows that company is not do the earnings management continuously because they won’t their profit manipulation effort is detected by investor. Investor must be intelligent. They have to behave like an investor. Investing in stocks or something else, must be based upon sound analysis of the stocks or assets they put on. So that, investor should understand, analyze, and should know about the company which they want to invest their money to. Another result shows that earnings management has no effect to the lone-term performance of stock. It shows that in buying the stocks they are 48 not analyze deeply the entire condition of the company and only seek for a short-term profit. It is better for investor for also look at long-term goal, learn everything about it well so investor can pick its best stocks and be able to tell when the best is about to fall or if there soon will be a new best before the market knows, so that investor not just do a speculation in investing their money for get huge capital gain but also truly as an investor in stock market.

C. Limitation and Further Research