IDEAS home Printed from https://ideas.repec.org/a/iaf/journl/y2021i4p39-45.html
   My bibliography  Save this article

The Impact of Tax Incentives, Political Costs, Litigation Risk and Equity Valuation on Accounting Conservatism

Author

Listed:
  • Rahmat Novari

    (Sriwijaya University, Palembang, Indonesia)

  • Yusnaini

    (Sriwijaya University, Palembang, Indonesia)

  • Luk Luk Fuadah

    (Sriwijaya University, Palembang, Indonesia)

Abstract

In Indonesia, as in other countries, according to the requirements of the tax authorities, there is a need for reconciliation to match accounting profit and fiscal profit. Some rules are allowed in accounting standards but not in taxation. In reducing losses, the company must provide evidence of transparent financial statements that prioritize conservatism. Accounting conservatism is a set of bookkeeping guidelines that call for a high degree of verification before a company can make a legal claim to any profit. The general concept is to factor in the worst-case scenario of a firm's financial future. The authors of this study attempt to assess the level of accounting conservatism based on several factors, namely through tax incentives, political costs, litigation risk, and equity valuation The purpose of this study is the analysis of the impact of tax incentives, political costs, litigation risk, and equity valuation on accounting conservatism. The secondary data used in this study are financial reports and annual reports published on the Indonesia Stock Exchange (IDX, www.idx.co.id) for 2015-2020. The sample of this study is manufacturing companies listed on the Indonesia Stock Exchange. Based on the criteria that have been determined using the purposive sampling method, there are 23 manufacturing companies. The results show that tax incentives and equity valuation have a positive and significant effect on accounting conservatism in manufacturing sector companies in Indonesia. Instead, factors such as political costs and litigation risk negatively affect accounting conservatism.

Suggested Citation

  • Rahmat Novari & Yusnaini & Luk Luk Fuadah, 2021. "The Impact of Tax Incentives, Political Costs, Litigation Risk and Equity Valuation on Accounting Conservatism," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 39-45, December.
  • Handle: RePEc:iaf:journl:y:2021:i:4:p:39-45
    DOI: 10.33146/2307-9878-2021-4(94)-39-45
    as

    Download full text from publisher

    File URL: http://www.afj.org.ua/pdf/866-vpliv-podatkovih-stimuliv-politichnih-vitrat-riziku-sudovih-procesiv-ta-ocinki-vlasnogo-kapitalu-na-konservatizm-buhgalterskogo-obliku.pdf
    Download Restriction: no

    File URL: http://www.afj.org.ua/en/article/866/
    Download Restriction: no

    File URL: https://libkey.io/10.33146/2307-9878-2021-4(94)-39-45?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Syeldila Sandy & Niki Lukviarman, 2015. "Pengaruh Corporate Governance Terhadap Tax Avoidance: Studi Empiris Pada Perusahaan Manufaktur," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 19(2), pages 85-98, Desember.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.

      More about this item

      Keywords

      tax incentives; political costs; litigation risk; equity valuation; accounting conservatism;
      All these keywords.

      JEL classification:

      • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

      Statistics

      Access and download statistics

      Corrections

      All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaf:journl:y:2021:i:4:p:39-45. See general information about how to correct material in RePEc.

      If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

      If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

      If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Serhiy Ostapchuk (email available below). General contact details of provider: https://edirc.repec.org/data/iafkvua.html .

      Please note that corrections may take a couple of weeks to filter through the various RePEc services.

      IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.