THE EFFECT OF ACCOUNTING CONSERVATISM IN THE RELATION
BETWEEN CURRENT EARNINGS AND FUTURE CASH FLOWS ON
INDONESIAN LISTED MANUFACTURING COMPANIES
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Institusion
Universitas Atma Jaya Yogyakarta
Author
Primandari, Ni Made Mega
Subject
Financial Accounting
Datestamp
2013-05-02 13:49:38
Abstract :
This study aims to test the effect of accounting conservatism to current earnings in predict future cash flows. Accounting conservatism is measured by nonoperating accruals, this model is develop by Givoly and Hayn (2000). Samples in this study are manufacturing companies listed in Indonesia Stock Exchange from 2000 until 2010 which meets the sample criteria. This study used t-test approach to test the hypothesis. The result of this research shows that null hypothesis is accepted and supported. This finding means accounting conservatism affects the relation between current earnings and future cash flows. The result of t-test shows that accounting conservatism positively affects the relation between current earnings and future cash flows. It is said when the numbers of accounting conservatism increase, the relation between current earnings and future cash flows will increase as well. This could happen because several positive impact brought by the application of accounting conservatim.
This study aims to test the effect of accounting conservatism to current earnings in predict future cash flows. Accounting conservatism is measured by nonoperating accruals, this model is develop by Givoly and Hayn (2000). Samples in this study are manufacturing companies listed in Indonesia Stock Exchange from 2000 until 2010 which meets the sample criteria. This study used t-test approach to test the hypothesis. The result of this research shows that null hypothesis is accepted and supported. This finding means accounting conservatism affects the relation between current earnings and future cash flows. The result of t-test shows that accounting conservatism positively affects the relation between current earnings and future cash flows. It is said when the numbers of accounting conservatism increase, the relation between current earnings and future cash flows will increase as well. This could happen because several positive impact brought by the application of accounting conservatim.
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