Good Corporate Governance and Profitability on Accounting Conservatism
DOI:
https://doi.org/10.26740/jaj.v17n2.p345-359Keywords:
Accounting conservatism; Good corporate governance; Institutional ownership; Leverage; ProfitabilityAbstract
Introduction / Main Objectives: This study examines the effect of good corporate governance mechanisms, consisting of institutional ownership, managerial ownership, and independent commissioners, and profitability on accounting conservatism, with leverage as a moderating variable. Methods: The study uses a quantitative approach with secondary data drawn from financial reports and annual reports of manufacturing companies listed on the Indonesia Stock Exchange from 2018 to 2020. A purposive sampling method yielded 31 companies with 93 total observations. Hypotheses were tested using moderated regression analysis with the absolute difference method, processed through SPSS version 26. Results / Findings: The results show that institutional ownership has a significant positive effect on accounting conservatism, while managerial ownership, independent commissioners, and profitability do not produce significant effects. With respect to the moderating role of leverage, the results show that leverage significantly strengthens the positive effect of institutional ownership on accounting conservatism. Leverage does not, however, significantly moderate the effects of managerial ownership, independent commissioners, or profitability on accounting conservatism. Conclusion: These findings indicate that the moderating function of leverage is selective, operating only through governance mechanisms that already demonstrate a direct monitoring effect on accounting conservatism.
References
Achyani, F., Lovita, E., & Putri, E. (2021). The effect of good corporate governance, sales growth, and capital intensity on accounting conservatism. Indonesian Accounting and Finance Research Journal, 6(3), 255–267.
Adhriatik, N., & Ismangil. (2019). Analysis of good corporate governance factors on accounting conservatism. Liability, 1(1), 83–102.
Alkurdi, A., Al-Nimer, M., & Dabaghia, M. (2017). Accounting conservatism and ownership structure effect: Evidence from industrial and financial Jordanian listed companies. International Journal of Economics and Financial Issues, 7(2), 608–619.
Alfian, A., Wahyuningrum, I. F., & Sarwono, E. (2018). The effect of managerial ownership, institutional ownership, and leverage on accounting conservatism. Journal of Accounting and Finance Research, 7(2), 1–15.
Badruddien, Y., Gustyana, T. T., & Dewi, A. S. (2017). The influence of good corporate governance, leverage and company size on company value. E-Proceedings of Management, 4(3), 2236–2243.
Darya, I. G. (2019). Management accounting. Uwais Inspiration for Indonesia.
El-Haq, Z. N. S., Zulpahmi, & Sumardi. (2019). The influence of managerial ownership, institutional ownership, growth opportunities, and profitability on accounting conservatism. Journal of Assets, 11(2), 315–328.
Ghozali, I. (2018). Application of multivariate analysis using the IBM SPSS 25 program (9th ed.). Undip Publishing Agency.
Hajawiyah, A., Wahyudin, A., Kiswanto, Sakinah, & Pahala, I. (2020). The effect of good corporate governance mechanisms on accounting conservatism with leverage as a moderating variable. Cogent Business and Management, 7(1), 1779479. https://doi.org/10.1080/23311975.2020.1779479
Handayani, R., Carolina, V., & Amanda, V. B. (2022). The mediation effect of market performance on the effect of capital intensity ratio, inventory intensity ratio, managerial ownership, and institutional ownership on tax aggressiveness. Kinerja, 26(2), 225–237. https://doi.org/10.24002/kinerja.v26i2.5870
Ivone, & Dewi, F. W. (2021). Analysis of the influence of GCG, KAP reputation, and leverage on accounting conservatism in companies listed on the Indonesian Stock Exchange. Journal Conference on Management, Business, Innovation, Education and Social Science, 1(1), 1267–1276.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kholifah, N. (2021). The influence of profitability, company risk, managerial ownership, and leverage on accounting conservatism. Journal of STIE Perbanas Surabaya, 1(1), 1–20.
Mareta, F., Agustina, A., Prathamy, Z., & Moozanah, S. (2021). The effect of leverage, liquidity, and capital intensity on accounting conservatism at PT Gudang Garam Tbk. Proceedings of the National Seminar on Economics and Accounting, 1(1), 1–11.
Marcheta, I. (2021). The effect of leverage and profitability on accounting conservatism. Journal of Accounting Research, 5(1), 1–12.
Pambudi, J. E. (2017). The influence of managerial ownership and debt covenant on accounting conservatism. Competitive Journal of Accounting and Finance, 1(1), 87–110. https://doi.org/10.31000/competitive.v1i1.109
Pasaribu, M. Y., Topowijono, & Sulasmiyati, S. (2018). The influence of capital structure, liquidity, and profitability on company value. Journal of Business Administration, 61(2), 93–101.
Pohan, H. T., Noor, I. N., & Bhakti, Y. F. (2018). The influence of profitability and corporate social responsibility disclosure on company value with company size as a moderating variable. Trisakti Accounting Journal, 5(1), 41–52.
Pratomo, D., & Havivah, V. (2021). The influence of board of commissioners characteristics and audit quality on accounting conservatism. Innovation, 17(2), 303–310.
Putra, I. D., & Amanah, L. (2019). The influence of profitability, good governance and leverage on tax avoidance in the consumer goods industry sector. Journal of Accounting Science and Research, 8(12), 1–19.
Ridho, M., & Arianto, D. (2022). Analysis of factors that influence the implementation of accounting conservatism. Journal of Economics and Entrepreneurship, 21(3), 1–10. https://doi.org/10.33061/jeku.v21i3.6902
Saputra, A. A. D. (2018). The influence of debt covenant, growth opportunities, political cost, bonus plan, and profitability on accounting conservatism (Undergraduate thesis). Syarif Hidayatullah State Islamic University, Jakarta.
Sekaran, U., & Bougie, R. (2017). Research methods for business: A skill-building approach (7th ed.). Wiley.
Setiawan, T., & Sugiyanto, S. (2021). The influence of liquidity, profitability and good corporate governance on company value. Proceedings of Pamulang University, 1(1), 1–12.
Sugiyono. (2018). Quantitative, qualitative, and R&D research methods. Alfabeta.
Supriyono, R. A. (2018). Accounting behavior. Gadjah Mada University Press.
Susanto, B., & Ramadhani, T. (2016). Factors influencing conservatism. Journal of Business and Economics, 23(2), 142–151.
Tumonggor, M., Murni, S., & Rate, P. V. (2017). Analysis of the influence of current ratio, return on equity, debt to equity ratio, and growth on stock returns in the cosmetics and household industry listed on the IDX. EMBA Journal, 5(2), 2203–2210.
Utama, I. Y. (2018). The influence of managerial ownership structure, leverage, growth opportunities, and company size on accounting conservatism (Undergraduate thesis). Faculty of Economics and Business, Syarif Hidayatullah State Islamic University, Jakarta.
Watts, R. L. (2003). Conservatism in accounting part I: Explanations and implications. Accounting Horizons, 17(3), 207–221. https://doi.org/10.2308/acch.2003.17.3.207
Yuniarsih, N., & Permatasari, A. (2021). The influence of institutional ownership, managerial ownership, leverage on accounting conservatism with profitability as a moderating variable. Jurnal Ekonomi Akuntansi, 6(1), 47–60.
Yuniati, M., Raharjo, K., & Oemar, A. (2016). The influence of dividend policy, profitability, debt policy, and ownership structure on company value in manufacturing companies listed on the Indonesian Stock Exchange. Journal of Accounting, 2(2), 1–15.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Lin Oktris, Abd. Rohman Taufiq, Dimas Hasan Samudera, Maisarah Mohamed Saat
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Abstract views: 25
,
PDF Downloads: 9
