The Board of Commissioners' Characteristic and Accounting Conservatism : The Case of Manufacturing Company Listed in IDX

S, Wilda Hafni (2008) The Board of Commissioners' Characteristic and Accounting Conservatism : The Case of Manufacturing Company Listed in IDX. Other thesis, Fakultas Ekonomi.

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Abstract

Conservatism has involved as part of an efficient contracting technology that helps in reducing deadweight losses resulting from agency problem. Because the Board of Commissioners understand the benefit of conservatism, they will more likely to advice and demand more conservative accounting in order to protect the shareholders' right. The objective of this study to examine relationship between of Board of Commissioners' characteristics and Accounting Conservatism. This study takes sample from manufacturing companies that listed in Indonesian Stock Exchange (IDX) from 2004-2006. The conservatism proxy used in this research is first, accrual obtained from differences between Net Income and Cash flow. Second, market to book value ratio. Additional testing also did by combining both of rneasurement. Generally, the results showed that Board of Commissioners' size has significant relationship with Accounting Conservatism. Oppositely, The Board of Commissioners' composition has insignificant relationship with Accounting Conservatism. The results of this study have revealed that Accounting Conservatism assisting Board Of Commissioners in reducing agency costs of firms. Keyword : Board of Commissioners' characteristics, Conservatism, Agency costs.

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