TINGKAT KONSERVATISME AKUNTANSI DI INDONESIA DAN HUBUNGANNYA DENGAN KARAKTERISTIK DEWAN SEBAGAI SALAH SATU MEKANISME CORPORATE GOVERNANCE
The objective of this research is to investigate the effect of board characteristics as part of corporate governance to conservatism in financial reporting. This research uses two measurements of conservatism, accrual as accounting based measure and book to market ratio as market based measure. Boards characteristics examine in this research are independency of boards, managerial ownership, and existence of audit committee. The result show that the existence of audit committee has a significant positive effect to conservatism measured by accrual, board independency has a significant positive effect to conservatism measured by book to market ratio, and managerial ownership has a significant negative effect to conservatism measured by book to market ratio. By using two proxy of conservatism, this research gives inconclusive evidence on the effect of board characteristic to conservatism. In conclusion, the effect of board characteristic to conservatism in financial reporting depends on the proxies to measure conservatism.
Keywords: conservatism, accrual, book to market ratio, corporate governance, board characteristics, board independency, managerial ownership, and audit committee
Generally accepted accounting principles (Generally Accepted Accounting Principles) provide for management flexibility in determining methods and accounting estimates that can be used. Flexibility will influence the behavior of managers in performing accounting and reporting financial transactions of the company. In a condition of doubt, a manager must apply the accounting principles that is conservatism.
Conservatism can be defined as a tendency which is owned by an accountant who require higher levels of verification to recognize a profit (good news in earnings) compared to acknowledge losses (bad news in earnings) (Basu, 1997). Traditionally, conservatism in accounting can be translated by the statement “does not anticipate a profit, but anticipate all losses” (Bliss, 1924 in Watts, 2003a). Conservatism in accounting implies the existence of the asymmetrical verification requirements between profit and loss recognition. Therefore, the higher the difference in the verification required for the recognition of gain versus loss recognition, the higher the level of accounting conservatism (Watts, 2003a).
(Simposium Nasional Akuntansi 11)