Does Accounting Conservatism Still Exist in Disruptive Era? The Mars Approach

Abstract

Conservatism is a principle which affects valuation in accounting because conservative still has an important role in accounting practices. The purpose of this study was to analyze the influence of the financial distress, managerial ownership structure, growth opportunities, and debt covenant on accounting conservatism in Indonesia companies that use multimedia. Purposive sampling method was used to determine the sample, which generates 113 companies. Multiple linear regression and Multivariate Adaptive Regression Spline (MARS) was used to analyze the data. The result of the normality test showed that residual was not normally distributed. Consequently, MARS was used to analyze the data. Result of the study suggested that financial distress, managerial ownership structure, growth opportunities, and debt covenant have an effect on accounting conservatism. Moreover, managerial ownership structure has the most effect on accounting conservatism. Therefore, management should pay attention in making policies in order to increase the firm value and investor intention to invest their capital.