Abstract:
This study aims to examine the effect of accounting conservatism and
firm size on earnings quality. This research is done by library study and
documentation method. Data were taken from Indonesia Capital Market
Directory (ICMD) and Financial Statement of manufacturing company in
Indonesia Stock Exchange (BEI). This research uses sample manufacturing
company during the year 2009-2013 by using purposive sampling method.
There are 13 companies during 2009-2013 that meet the sample criteria. The
method of analysis used in this study is multiple regression analysis.
The results of this study indicate that all the variables tested in this study
have a significant influence on earnings quality. The variables of accounting
conservatism show negative results, which means that the more conservative the
company will decrease its profitability due to fluctuations in profit that tend to
be inconsistent so that the accrual component in it will make the operating cash
flow in the future becomes uncertain. Variable firm size (size) shows negative
results, this proves companies with high assets tend to have better quality
earnings, so that large companies do not need to practice earnings
manipulation.
Keywords: accounting conservatism, firm size, earnings quality
