خلاصه ماشینی:
W. Kusuma 1* Department of Economics, Sebelas Maret University, Surakarta, Indonesia 2 Department of Economics and Business, Gadjah Mada University, Yogyakarta, Indonesia Received 25 Ma y 20 11, Accepted 18 July 20 11 AB S T R A CT: This study presents empirical evidence concerning the effect of different accounting standard on earnings management.
Tighter accounting standards regime restricts management’s descretion to manipulate accruals, and at the same time, induce more costly real earnings management activities.
Since reported earnings are the results of the underlying business operations and accounting choice th at record th e tran sactions, firms may manage earnings through manipulation of the accrual and real activities.
Tightened accounting standards can reduce accrual-based earn in gs man agemen t, but increase earnings management through real activities manipulation.
Th e r esult from th e first h ypothesis probably indicates that approach of the rule-based accounting standards used by the US is capable of reducing the practices of accrual earnings management.
Table 7 is also showing that the regression coefficient of country variable is negative, which it means that the more firm of its accounting standards the lower conduction of accrual earnings management.
T h e WLS em p h a s i z es a s s u m p t i on th a t t h e accounting standards approach in one country, either with rule-based or principle-based approaches, may affect earnings management practices.
This result probably indicates that tighter accounting standards (rule-based) can reduce accrual earnings management practices.