THE EFFECT OF FINANCIAL DISTRESS, LEVERAGE RATIO AND SIZE OF COMPANIES ON ACCOUNTING CONSERVATISM
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Date
2020
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Journal ISSN
Volume Title
Publisher
Solid State Technology Volume: 63 Issue: 4
Abstract
This study has a goal to determine the effect of financial distress, leverage ratio, and
company size on accounting conservatism in banking companies listed on the Indonesia Stock
Exchange from 2016 to 2019. The secondary data from www.idx.co.id. in the form of
financial statements of banking companies were used. The samples were recruited with
purposive sampling resulting in 9 companies that meet the criteria. The variables tested are
financial distress (X1), leverage ratio (X2), company size (X3), and accounting conservatism
(Y). Multiple linear regression and classic assumption test were used for data analysis, while
F-test and t-test were used for testing the hypothesis. The critical value of t is determined by
the degree of freedom equal to n-1. The level of significance is 5% or 0.05 with the degree of
freedom equal to n-k-1. It is concluded that H0 is accepted and Hα is rejected, showing that
financial distress, leverage ratio, and company size are not strongly correlated with
accounting conservatism. Meanwhile, financial distress, leverage ratio, and company size
contribute to accounting conservatism by 14%, while the remaining 86% are the other
factors.
Description
Keywords
Financial Distress, Leverage Ratio, Company Size, Accounting Conservatism