The Effect of Accounting Disclosure, Concentrated Ownership, and Accounting Harmonization to Earnings Quality




  • Title :

    The Effect of Accounting Disclosure, Concentrated Ownership, and Accounting Harmonization to Earnings Quality: The Case of Asia Pacific

    Author : Alfon Inggrid & Carolina Ratna Wardhani
    (Graduate Program in Accounting Faculty of Economics, University of Indonesia)

    Abstract This study aims to determine the influence of the level of disclosure and concentrated ownership on the quality of earnings in the context of differences in the degree of local standards to IFRS convergence between countries. This research was carried out against the companies listed on stock exchanges of Indonesia, Singapore, Hong Kong, and Australia. This study will use a multidimensional measure earnings quality using the five measures of earnings quality which are earnings predictability, earnings management, earnings response coefficients, and conservatism. In general, this study found that higher levels of disclosure by companies, the high quality of earnings reported by companies. In the context of increasingly high demand for convergence of accounting standards to IFRS, this study supports the role of convergence in improving the quality of corporate earnings. The use of accounting standards to IFRS convergence will strengthen the influence of the level of disclosure to earnings quality.

    Key words: Disclosure, ownership, degree of convergence of local GAAP to IFRS.

    Hypothesis

    H1: The level of disclosure has positive influence on earnings quality.
    H2: Companies with concentrated ownership will have a lower earnings quality than companies with unconcentrated ownership.
    H3 : Degree of convergence of local standards to IFRS has positive influence on earnings quality.
    H4: Effect of level of disclosure to the quality of earnings depends on the level of IFRS convergence in the countries where it operates.

    Conclusion

    In general, this study found that higher levels of disclosure by companies, the high quality of earnings reported by companies. This study also shows that firms with concentrated ownership will have a lower quality of earnings, although only supported by two out of four model used. In the context of increasingly high demand for convergence of accounting standards IFRS, this study supports the role of convergence is in improving the quality of corporate earnings. The use of accounting standards to IFRS convergence will strengthen the influence of the level of disclosure of earnings quality.

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