Copyright: © the author(s), publisher and licensee Technoscience Academy. This is an open-access article distributed under the terms of the Creative Commons Attribution Non-Commercial License, which permits unrestricted non- commercial use, distribution, and reproduction in any medium, provided the original work is properly cited International Journal of Scientific Research in Science and Technology Print ISSN: 2395-6011 | Online ISSN: 2395-602X (www.ijsrst.com) doi : https://doi.org/10.32628/IJSRST207663 377 Earnings Quality, Asymmetric Information, and Market Response : Insights from Indonesia Puji Wibowo *1 , Etty Murwaningsari 2 * 1 Faculty of Economics and Business, Trisakti University and Lecturer of Polytechnic of State Finance STAN, Indonesia 2 Faculty of Economics and Business, Trisakti University, Indonesia Article Info Volume 7, Issue 6 Page Number: 377-395 Publication Issue : November-December-2020 Article History Accepted : 15 Dec 2020 Published : 29 Dec 2020 ABSTRACT This study aims to investigate the impact of earnings quality and asymmetric information on market reaction which is proxied by cumulative abnormal return (CAR). This study also attempts to analyze whether good governance is playing an important role in moderating the effects of those two independent variables on CAR. By using purposive sampling method, this study covers 125 manufacturing companies listed on Indonesian Stock Exchange for 2017-2018 period to reveal above agenda. By using generalize least square (GLS) fixed effect model, it is found that reported earnings on financial statement have meaningful information for investors. By this, investors could expect stock return by relying on this earning information. Meanwhile, asymmetric information also matters for investors to make decisions regarding stock transaction. However, independence commissioner which is predicted to have an important role for stock performance, is not proved as moderating variable in this study. Keywords: Asymmetric Information, Cumulative Abnormal Return, Earnings Quality, Independence Board I. INTRODUCTION The essence of earnings information for financial statement users is a long-standing debate in the last decades. Since the results of research by Ball and Brown (1968) and Beaver (1968) were published, various literature studies have examined the relevance of book value, income and cash flow. Many studies, as reported by Ahmadi and Bouri (2018), explain that book value and earnings have significant information content in equity valuation (Ohlson, 1995; Feltham and Ohlson, 1995; Easton, 1999). In particular, prior studies such as Dechow et al.'s (1999) and Landman and Maydew's (2002) show that earnings have higher value relevance and more information content compared to cash flows, because accrual accounting argues for better expectations about forecasts. cash flow rather than predictions about current cash receipts and payments. All these studies have been undertaken in several developed countries. However it might be the case that developing countries provide different perspectives. Various studies evaluating the value relevance in emerging markets can be found in Ariff and Cheng (2011), Tamer (2014), Murni et al. (2015) and Qu and