Determinants of earnings persistence in Indonesian food and beverage firms
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Jun 30, 2026
Keywords:
Earnings persistence, Operating Cash Flow, Tax planning, Debt level
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Abstract
There has been a great deal of mixed empirical evidence on the determinants of earnings persistence, largely because previous research has looked at individual variables in isolation rather than within a comprehensive framework. Also, there is no evidence from non-cyclical industries in the wake of the post-pandemic recovery. This research aims to examine the joint effect of operating cash flow, tax planning strategies and debt levels on earnings persistence of Indonesian food and beverage companies listed on the Indonesia Stock Exchange in the period 2020-2024. This study adopted a quantitative approach using secondary data from 21 firms, providing 105 firm-year observations. Panel data regression analysis with the fixed-effects model was employed to test the hypotheses in the study. The results show that cash flow from operation has positive effect on earnings persistence (β = 0.254, p = 0.015) and tax planning has the most positive effect (β = 0.500, p = 0.014). Conversely, debt levels do not have a statistically significant impact (β = 0.002, p = 0.988) and the model explains 71.5% of the variance in earnings persistence (adjusted R² = 0.715). This study provides a wide analytical framework that shows that operational efficiency and fiscal prudence are more important drivers of earnings quality in industries with stable demand than decisions about capital structure. The results challenge the generalisability of the debt monitoring hypothesis and point to operational transparency as an alternative to debt-based governance mechanisms in sectors that are insulated from the economic cycle.
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How to Cite
Ismanto, J., Effriyanti, E., & Indrayani, L. (2026). Determinants of earnings persistence in Indonesian food and beverage firms. Indonesia Accounting Research Journal, 13(4), 322–331. Retrieved from https://journals.iarn.or.id/index.php/Accounting/article/view/645
References
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Anderson, M., & Rahiminejad, S. (2025). Book–Tax Differences and Earnings Persistence: The Moderating Role of Sales Decline. Journal of Risk and Financial Management, 18(7), 389. https://doi.org/10.3390/jrfm18070389
Astuti, D. P., & Damayanty, P. (2024). The Influence Of Operational Cash Flow, Levels Of Debt, And Firm Size On Earnings Persistence (Empirical Study Of Property And Real Estate Companies Listed On The Indonesia Stock Exchange, 2019-2021). International Journal of Economics, Business and Accounting Research (IJEBAR), 8(1), 1–13. https://doi.org/https://doi.org/10.29040/ijebar.v8i1.12463
Bansal, M. (2024). Earnings management: a three-decade analysis and future prospects. Journal of Accounting Literature, 46(4), 630–670. https://doi.org/10.1108/JAL-10-2022-0107
Chen, Y., Niu, F., & Zeng, T. (2025). Tax planning and earnings management: their impact on earnings persistence. Journal of Applied Accounting Research, 26(2), 412–432. https://doi.org/10.1108/JAAR-02-2024-0071
Choi, Y. Y. (2021). Does Tax Avoidance Induce Earnings Persistence? An Empirical Study in Korea. Journal of Asian Finance, 8(6), 759–0767. https://doi.org/https://doi.org/10.13106/jafeb.2021.vol8.no6.0759
Delgado, F. J., Rodríguez, E. F., Fernández, R. G., Landajo, M., & Arias, A. M. M. (2023). Tax avoidance and earnings management: a neural network approach for the largest European economies. Financial Innovation. https://doi.org/https://doi.org/10.1186/s40854-022-00424-8
Eloff, A.-M., & Steenkamp, S. (2022). Integrated report quality and earnings management – Evidence from South Africa. South African Journal of Economic and Management Sciences, 25(1). https://doi.org/10.4102/sajems.v25i1.4581
Fauziah, F., & Surya Abbas, D. (2024). Peffect Of Debt Levels, Book Tax Difference, Sales Volatility And Operating Cash Flows On Profit Persistence. Simposium Ilmiah Akuntansi (SIA), January 2018, 5–8. https://sia-iaikpd.fdaptsu.org/index.php/sia/article/view/84
Gao, K., Pittman, J., Wang, X., & Wang, Z. (2023). Stock market liberalization and earnings management: Evidence from a quasi‐natural experiment in China. Contemporary Accounting Research, 40(4), 2547–2576. https://doi.org/10.1111/1911-3846.12899
Haqqi, A. A., Hizazi, A., & Yetti, S. (2024). The Influence of Debt Levels, Operating Cash Flow, and Firm Size on Earnings Persistence. Jurnal Cakrawala Akuntansi, 14(1), 50–78. https://online-journal.unja.ac.id/jca/article/view/46724/21667
Hizazi, A., Siregar, S. V., Martani, D., & Diyanti, V. (2022a). The persistence of tax avoidance and its effect on the persistence of earnings. J. for Global Business Advancement, 15(4), 469. https://doi.org/10.1504/JGBA.2022.130415
Hizazi, A., Siregar, S. V., Martani, D., & Diyanti, V. (2022b). The persistence of tax avoidance and its effect on the persistence of earnings. J. for Global Business Advancement, 15(4), 469. https://doi.org/10.1504/JGBA.2022.130415
Iswati, H., Andanarini, D., & Savitri, M. (2026). The role of leverage, sales volatility, and accrual reliability on earnings persistence. Jurnal Akademik Akuntansi, 9(1), 176–194. https://doi.org/10.22219/jaa.v9i1.43973
Jia, J., & Li, Z. (2022). Corporate sustainability, earnings persistence and the association between earnings and future cash flows. Accounting & Finance, 62(1), 299–336. https://doi.org/10.1111/acfi.12791
Kasbar, M. S. H., Tsitsianis, N., Triantafylli, A., & Haslam, C. (2023). An empirical evaluation of the impact of agency conflicts on the association between corporate governance and firm financial performance. Journal of Applied Accounting Research, 24(2), 235–259. https://doi.org/10.1108/JAAR-09-2021-0247
Khotimah, K., & Larasati, A. Y. (2026). Firm Size as a Moderator in Food and Beverage Companies on the IDX : Tax Planning and Earnings Persistence. Al-Kharaj: Journal of Islamic Economic and Business, 8(1), 220–231. https://doi.org/10.24256/kharaj.v8i1.8965
Khuong, N. V., Abdul Rahman, A. A., Thuan, P. Q., Liem, N. T., Anh, L. H. T., Thuy, C. T. M., & Ly, H. T. N. (2022). Earnings Management, Board Composition and Earnings Persistence in Emerging Market. Sustainability, 14(3), 1061. https://doi.org/10.3390/su14031061
Kim, J.-B., Kim, J., & Lee, J. J. (2025). Earnings versus cash flows in equity valuation: Evidence from the COVID-19 crisis. Advances in Accounting, 69, 100837. https://doi.org/10.1016/j.adiac.2025.100837
Laghari, F., Ahmed, F., & López García, M. de las N. (2023). Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China. PLOS ONE, 18(6), e0287135. https://doi.org/10.1371/journal.pone.0287135
Lou, Y., Wright, B., Wang, Y., & Zhao, C. (2025). Conforming tax avoidance and earnings persistence. Pacific Accounting Review, 37(1), 89–112. https://doi.org/10.1108/PAR-01-2024-0019
Memon, S. U. R., Pawase, V. R., Pavase, T. R., & Soomro, M. A. (2021). Investigation of COVID-19 Impact on the Food and Beverages Industry: China and India Perspective. Foods, 10(5), 1069. https://doi.org/10.3390/foods10051069
Nurdina, Yudi Sidharta, R., Pudji Estiasih, S., & Abidah, S. (2023). Book Tax Differences, Operating Cash Flow, Levels of Debt, and Persistence of Earnings. Business and Accounting Research (IJEBAR) Peer Reviewed-International Journal, 7(2), 2023. https://doi.org/https://doi.org/10.29040/ijebar.v7i2.9156
Oh, H., & Park, S. (2021). Corporate Sustainable Management, Dividend Policy and Chaebol. Sustainability, 13(13), 7495. https://doi.org/10.3390/su13137495
Paramaratri, H., Setyorini, C. T., & Suparlinah, I. (2023). Earnings persistence determinants in Indonesia’s consumer goods companies. Jurnal Akuntansi & Auditing Indonesia, 27(1), 21–32. https://doi.org/10.20885/jaai.vol27.iss1.art3
Pereira, Â., Pereira, C., Gomes, L., & Lima, A. (2023). Do Taxes Still Affect Earning Persistence? Administrative Sciences, 13(2), 48. https://doi.org/10.3390/admsci13020048
Pereira, C., Gomes, L., & Lima, A. (2023). Impact of debt and taxes on earnings persistence of Portuguese SMEs. Review of Business Management, 25(2), 186–198. https://doi.org/10.7819/rbgn.v25i2.4222
Pereira, C., Monteiro, A., Silva, D., & Lima, A. (2023). Do the Levels of Environmental Sustainability Disclosure and Indebtness Affect the Quality of Earnings? Sustainability, 15(4), 2871. https://doi.org/10.3390/su15042871
Renaldo, N., Sudarno, Andi, Veronica, K., & Hutahuruk, M. B. (2023). Sales Volatility, Operating Cash Flow Volatility, Debt, and Firm Size on Future Earnings Persistence. The Accounting Journal of Binaniaga, 8(01), 27–38. https://doi.org/10.33062/ajb.v8i01.19
Rosadi, D. (2021). Ekonometrika Dan Analisis Runtun Waktu Terapan Dengan EViews, Aplikasi Untuk Bidang Ekonomi, Bisnis, Dan Keuangan. Andi Publisher.
Sandy, R. M., & Mulya, A. S. (2025). Earnings Response Coefficient: Earnings persistence moderated by capital structure and economic growth. Cogent Business & Management, 12(1). https://doi.org/10.1080/23311975.2024.2441475
Sequeira, J., Pereira, C., Gomes, L., & Lima, A. (2024). Features of the Association between Debt and Earnings Quality for Small and Medium-Sized Entities. Risks, 12(2), 32. https://doi.org/10.3390/risks12020032
Tulcanaza-Prieto, A. B., & Lee, Y. (2022). Real Earnings Management, Firm Value, and Corporate Governance: Evidence from the Korean Market. International Journal of Financial Studies, 10(1), 19. https://doi.org/10.3390/ijfs10010019
Velte, P. (2023). Sustainable institutional investors, corporate sustainability performance, and corporate tax avoidance: Empirical evidence for the European capital market. Corporate Social Responsibility and Environmental Management, 30(5), 2406–2418. https://doi.org/10.1002/csr.2492
Wang, N., Li, D., Cui, D., & Ma, X. (2022). Environmental, social, governance disclosure and corporate sustainable growth: Evidence from China. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.1015764
Zimon, G., Appolloni, A., Tarighi, H., Shahmohammadi, S., & Daneshpou, E. (2021). Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control. Risks, 9(8), 146. https://doi.org/10.3390/risks9080146
Anderson, M., & Rahiminejad, S. (2025). Book–Tax Differences and Earnings Persistence: The Moderating Role of Sales Decline. Journal of Risk and Financial Management, 18(7), 389. https://doi.org/10.3390/jrfm18070389
Astuti, D. P., & Damayanty, P. (2024). The Influence Of Operational Cash Flow, Levels Of Debt, And Firm Size On Earnings Persistence (Empirical Study Of Property And Real Estate Companies Listed On The Indonesia Stock Exchange, 2019-2021). International Journal of Economics, Business and Accounting Research (IJEBAR), 8(1), 1–13. https://doi.org/https://doi.org/10.29040/ijebar.v8i1.12463
Bansal, M. (2024). Earnings management: a three-decade analysis and future prospects. Journal of Accounting Literature, 46(4), 630–670. https://doi.org/10.1108/JAL-10-2022-0107
Chen, Y., Niu, F., & Zeng, T. (2025). Tax planning and earnings management: their impact on earnings persistence. Journal of Applied Accounting Research, 26(2), 412–432. https://doi.org/10.1108/JAAR-02-2024-0071
Choi, Y. Y. (2021). Does Tax Avoidance Induce Earnings Persistence? An Empirical Study in Korea. Journal of Asian Finance, 8(6), 759–0767. https://doi.org/https://doi.org/10.13106/jafeb.2021.vol8.no6.0759
Delgado, F. J., Rodríguez, E. F., Fernández, R. G., Landajo, M., & Arias, A. M. M. (2023). Tax avoidance and earnings management: a neural network approach for the largest European economies. Financial Innovation. https://doi.org/https://doi.org/10.1186/s40854-022-00424-8
Eloff, A.-M., & Steenkamp, S. (2022). Integrated report quality and earnings management – Evidence from South Africa. South African Journal of Economic and Management Sciences, 25(1). https://doi.org/10.4102/sajems.v25i1.4581
Fauziah, F., & Surya Abbas, D. (2024). Peffect Of Debt Levels, Book Tax Difference, Sales Volatility And Operating Cash Flows On Profit Persistence. Simposium Ilmiah Akuntansi (SIA), January 2018, 5–8. https://sia-iaikpd.fdaptsu.org/index.php/sia/article/view/84
Gao, K., Pittman, J., Wang, X., & Wang, Z. (2023). Stock market liberalization and earnings management: Evidence from a quasi‐natural experiment in China. Contemporary Accounting Research, 40(4), 2547–2576. https://doi.org/10.1111/1911-3846.12899
Haqqi, A. A., Hizazi, A., & Yetti, S. (2024). The Influence of Debt Levels, Operating Cash Flow, and Firm Size on Earnings Persistence. Jurnal Cakrawala Akuntansi, 14(1), 50–78. https://online-journal.unja.ac.id/jca/article/view/46724/21667
Hizazi, A., Siregar, S. V., Martani, D., & Diyanti, V. (2022a). The persistence of tax avoidance and its effect on the persistence of earnings. J. for Global Business Advancement, 15(4), 469. https://doi.org/10.1504/JGBA.2022.130415
Hizazi, A., Siregar, S. V., Martani, D., & Diyanti, V. (2022b). The persistence of tax avoidance and its effect on the persistence of earnings. J. for Global Business Advancement, 15(4), 469. https://doi.org/10.1504/JGBA.2022.130415
Iswati, H., Andanarini, D., & Savitri, M. (2026). The role of leverage, sales volatility, and accrual reliability on earnings persistence. Jurnal Akademik Akuntansi, 9(1), 176–194. https://doi.org/10.22219/jaa.v9i1.43973
Jia, J., & Li, Z. (2022). Corporate sustainability, earnings persistence and the association between earnings and future cash flows. Accounting & Finance, 62(1), 299–336. https://doi.org/10.1111/acfi.12791
Kasbar, M. S. H., Tsitsianis, N., Triantafylli, A., & Haslam, C. (2023). An empirical evaluation of the impact of agency conflicts on the association between corporate governance and firm financial performance. Journal of Applied Accounting Research, 24(2), 235–259. https://doi.org/10.1108/JAAR-09-2021-0247
Khotimah, K., & Larasati, A. Y. (2026). Firm Size as a Moderator in Food and Beverage Companies on the IDX : Tax Planning and Earnings Persistence. Al-Kharaj: Journal of Islamic Economic and Business, 8(1), 220–231. https://doi.org/10.24256/kharaj.v8i1.8965
Khuong, N. V., Abdul Rahman, A. A., Thuan, P. Q., Liem, N. T., Anh, L. H. T., Thuy, C. T. M., & Ly, H. T. N. (2022). Earnings Management, Board Composition and Earnings Persistence in Emerging Market. Sustainability, 14(3), 1061. https://doi.org/10.3390/su14031061
Kim, J.-B., Kim, J., & Lee, J. J. (2025). Earnings versus cash flows in equity valuation: Evidence from the COVID-19 crisis. Advances in Accounting, 69, 100837. https://doi.org/10.1016/j.adiac.2025.100837
Laghari, F., Ahmed, F., & López García, M. de las N. (2023). Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China. PLOS ONE, 18(6), e0287135. https://doi.org/10.1371/journal.pone.0287135
Lou, Y., Wright, B., Wang, Y., & Zhao, C. (2025). Conforming tax avoidance and earnings persistence. Pacific Accounting Review, 37(1), 89–112. https://doi.org/10.1108/PAR-01-2024-0019
Memon, S. U. R., Pawase, V. R., Pavase, T. R., & Soomro, M. A. (2021). Investigation of COVID-19 Impact on the Food and Beverages Industry: China and India Perspective. Foods, 10(5), 1069. https://doi.org/10.3390/foods10051069
Nurdina, Yudi Sidharta, R., Pudji Estiasih, S., & Abidah, S. (2023). Book Tax Differences, Operating Cash Flow, Levels of Debt, and Persistence of Earnings. Business and Accounting Research (IJEBAR) Peer Reviewed-International Journal, 7(2), 2023. https://doi.org/https://doi.org/10.29040/ijebar.v7i2.9156
Oh, H., & Park, S. (2021). Corporate Sustainable Management, Dividend Policy and Chaebol. Sustainability, 13(13), 7495. https://doi.org/10.3390/su13137495
Paramaratri, H., Setyorini, C. T., & Suparlinah, I. (2023). Earnings persistence determinants in Indonesia’s consumer goods companies. Jurnal Akuntansi & Auditing Indonesia, 27(1), 21–32. https://doi.org/10.20885/jaai.vol27.iss1.art3
Pereira, Â., Pereira, C., Gomes, L., & Lima, A. (2023). Do Taxes Still Affect Earning Persistence? Administrative Sciences, 13(2), 48. https://doi.org/10.3390/admsci13020048
Pereira, C., Gomes, L., & Lima, A. (2023). Impact of debt and taxes on earnings persistence of Portuguese SMEs. Review of Business Management, 25(2), 186–198. https://doi.org/10.7819/rbgn.v25i2.4222
Pereira, C., Monteiro, A., Silva, D., & Lima, A. (2023). Do the Levels of Environmental Sustainability Disclosure and Indebtness Affect the Quality of Earnings? Sustainability, 15(4), 2871. https://doi.org/10.3390/su15042871
Renaldo, N., Sudarno, Andi, Veronica, K., & Hutahuruk, M. B. (2023). Sales Volatility, Operating Cash Flow Volatility, Debt, and Firm Size on Future Earnings Persistence. The Accounting Journal of Binaniaga, 8(01), 27–38. https://doi.org/10.33062/ajb.v8i01.19
Rosadi, D. (2021). Ekonometrika Dan Analisis Runtun Waktu Terapan Dengan EViews, Aplikasi Untuk Bidang Ekonomi, Bisnis, Dan Keuangan. Andi Publisher.
Sandy, R. M., & Mulya, A. S. (2025). Earnings Response Coefficient: Earnings persistence moderated by capital structure and economic growth. Cogent Business & Management, 12(1). https://doi.org/10.1080/23311975.2024.2441475
Sequeira, J., Pereira, C., Gomes, L., & Lima, A. (2024). Features of the Association between Debt and Earnings Quality for Small and Medium-Sized Entities. Risks, 12(2), 32. https://doi.org/10.3390/risks12020032
Tulcanaza-Prieto, A. B., & Lee, Y. (2022). Real Earnings Management, Firm Value, and Corporate Governance: Evidence from the Korean Market. International Journal of Financial Studies, 10(1), 19. https://doi.org/10.3390/ijfs10010019
Velte, P. (2023). Sustainable institutional investors, corporate sustainability performance, and corporate tax avoidance: Empirical evidence for the European capital market. Corporate Social Responsibility and Environmental Management, 30(5), 2406–2418. https://doi.org/10.1002/csr.2492
Wang, N., Li, D., Cui, D., & Ma, X. (2022). Environmental, social, governance disclosure and corporate sustainable growth: Evidence from China. Frontiers in Environmental Science, 10. https://doi.org/10.3389/fenvs.2022.1015764
Zimon, G., Appolloni, A., Tarighi, H., Shahmohammadi, S., & Daneshpou, E. (2021). Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control. Risks, 9(8), 146. https://doi.org/10.3390/risks9080146
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