PENGARUH KONSERVATISME LABA TERHADAP KOEFISIEN RESPONS LABA

Abstract

This research examines earnings response coefficient (ERC) of
companies applying conservatism and more optimistic accounting.
Conservatism accounting practices are expected to affect companies’ ERC
indirectly. Conservative accounting would influence earnings prediction
power (Panman and Zhang, 2002). Then, earnings prediction power would
influence ERC (Lipe, 1990).
The population consists of manufacturing companies listed on the
Jakarta Stock Exchange during period of 1999-2005. Sample members of 91
companies are selected using purposive sampling method. Conservative
accounting is proxied by earnings/stock return relation measure,
earnings/accrual measure, and net asset measures (Watts, 2003).
The result shows that companies which apply conservative accounting
have weaker earnings prediction power than those which do not. Companies
with conservative accounting would have fluctuated earnings and low
prediction power of earnings.
ERC of companies with conservative accounting are lower than those
with more optimistic accounting. Applying conservative accounting would
result in fluctuated earnings and lower earnings predictability which is less
beneficial in predicting future earnings, thus ERC would be low.