Debt, State-owned Enterprise, and Accounting Conservatism: Indonesia Evidence

Dewi Kartika Sari

2019

Abstract

This research aims to empirically examine the effects of public debt ownership and state ownership on the level of corporate conservatism in Indonesia. More specifically, this study will examine whether: (1) the level of conservatism of companies that have public debt will be higher than companies that only have private debt; (2) conservatism of state-owned enterprise (SOE) will be lower than non-SOE companies, and (3) conservatism of SOEs that have public debt will be higher than SOEs that do not have public debt. The examination is done using two ways, market-price based and accrual-based. Both of these methods are used to mitigate the bias of results due to the inefficient nature of the market. The test results show that accrual-based measurements are better at explaining conservatism in an inefficient market such in Indonesia. Accrual-based test results show that: (1) conservatism of companies that have public debt (bonds) is higher than companies that only have private debt; (2) SOE conservatism is lower than non-SOE, and (3) conservatism of SOE that have public debt is lower than SOEs that do not have public debt. The low level of SOE conservatism is presumably due to the assumption that there is protection from the government, weak public demand for SOE conservatism, and the absence of regulations that encourage the practice of high conservatism in SOE.

Paper Citation

in Harvard Style

Kartika Sari D. (2019). Debt, State-owned Enterprise, and Accounting Conservatism: Indonesia Evidence. In Proceedings of the 4th International Conference of Vocational Higher Education - Volume 1: ICVHE, ISBN 978-989-758-530-2, pages 153-167. DOI: 10.5220/0010170800002967

in Bibtex Style

@conference{icvhe19,
author={Dewi Kartika Sari},
title={Debt, State-owned Enterprise, and Accounting Conservatism: Indonesia Evidence},
booktitle={Proceedings of the 4th International Conference of Vocational Higher Education - Volume 1: ICVHE,},
year={2019},
pages={153-167},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0010170800002967},
isbn={978-989-758-530-2},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 4th International Conference of Vocational Higher Education - Volume 1: ICVHE,
TI - Debt, State-owned Enterprise, and Accounting Conservatism: Indonesia Evidence
SN - 978-989-758-530-2
AU - Kartika Sari D.
PY - 2019
SP - 153
EP - 167
DO - 10.5220/0010170800002967