Does conservatism Influence Earnings Management Activities? The Case of Singapore and Indonesian Firms

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dc.authoridTopçu, Güneş / 0000-0001-8810-8945
dc.contributor.authorElvina, Vania
dc.contributor.authorRudiawarni, Felizia arni
dc.contributor.authorSulistiawan, Dedhy
dc.contributor.authorTopçu, Güneş
dc.date.accessioned2025-01-27T21:03:55Z
dc.date.available2025-01-27T21:03:55Z
dc.date.issued2024
dc.departmentÇanakkale Onsekiz Mart Üniversitesi
dc.description.abstractThis paper aims to evaluate the impact of conservatism on earnings management (EM) in developed and emerging markets, Singapore and Indonesia, respectively. Conservatism is the principle requiring companies to recognize more on bad news than good news. Conditional conservatism (CC) is dependent conservatism that happens after news, but unconditional conservatism (UC) is independent conservatism that results for applying a conservative measure. We analyze both of conservatism towards accrual -based and real EM. The relation of those variables should be different between countries. Our research is based on 544 firms for accrual -based earnings management, 535 firms for real EM in Singapore, 777 firms for accrualbased EM and 654 for real EM in Indonesia from all sectors excluding the financial services industry from 2019 to 2021. We predict that conservatism affects EM, and the impact is different between emerging and developed markets. Earnings is often seen as the performance measure for a firm's analysis and valuation; thus, the conservative accounting choices used may impact the company's actions on EM. We find that CC negatively affects the company's accrual -based and real EM in the Indonesian market. UC firms tend to increase accrual -based EM. While in the Singapore stock exchange, the more conditional (unconditional) conservative the firms, the more likely the company to do more (less) real EM. Firms in Singapore present more real EM than firms in Indonesia. Conversely, firms in Indonesia have higher accrual -based EM. Our findings also provide evidence that the role of conservatism to EM is different between developed or emerging market. Our evidence supports the argument that conservatism limits accrualbased EM. Thus, more conservative firms shift to real EM.
dc.identifier.doi10.14254/1800-5845/2024.20-2.4
dc.identifier.endpage52
dc.identifier.issn1800-5845
dc.identifier.issn1800-6698
dc.identifier.issue2
dc.identifier.scopus2-s2.0-85192153727
dc.identifier.scopusqualityQ1
dc.identifier.startpage43
dc.identifier.urihttps://doi.org/10.14254/1800-5845/2024.20-2.4
dc.identifier.urihttps://hdl.handle.net/20.500.12428/27495
dc.identifier.volume20
dc.identifier.wosWOS:001208306400016
dc.identifier.wosqualityN/A
dc.indekslendigikaynakWeb of Science
dc.indekslendigikaynakScopus
dc.language.isoen
dc.publisherEconomic Laboratory Transition Research Podgorica-Elit
dc.relation.ispartofMontenegrin Journal of Economics
dc.relation.publicationcategoryinfo:eu-repo/semantics/openAccess
dc.rightsinfo:eu-repo/semantics/openAccess
dc.snmzKA_WoS_20250125
dc.subjectConditional conservatism
dc.subjectunconditional conservatism
dc.subjectaccrual earnings management
dc.subjectreal earnings management
dc.subjectIndonesia
dc.subjectSingapore
dc.titleDoes conservatism Influence Earnings Management Activities? The Case of Singapore and Indonesian Firms
dc.typeArticle

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