Determinants of Accounting Conservatism: The Moderating Role of State Ownership in Indonesian Banking
DOI:
https://doi.org/10.47065/arbitrase.v6i3.3078Keywords:
Accounting Conservatism; Leverage; Profitability; State Ownership; Banking SectorAbstract
This study aims to analyse the effect of leverage and profitability on accounting conservatism, with state ownership serving as a moderating variable in Indonesian banks during the 2022–2024 period. The research employs a quantitative approach using panel data regression based on Robust Least Squares (M-estimation) with EViews 12. The sample consists of 147 bank-year observations from banks listed on the Indonesia Stock Exchange (IDX). The empirical results indicate that leverage has a negative and significant effect on accounting conservatism (? = ?0.3757; p < 0.01), suggesting that higher debt levels are associated with lower levels of conservative reporting. Profitability also shows a negative and statistically significant effect (? = ?71,392.95; p < 0.01), indicating that more profitable banks tend to adopt less conservative accounting practices. The coefficient of determination (Adjusted R² = 0.8009) suggests that approximately 80.09% of the variation in accounting conservatism is explained by the model. Regarding moderation, state ownership does not significantly moderate the relationship between leverage and conservatism (p > 0.05). However, it significantly moderates the effect of profitability (? = ?128,739.8; p < 0.05), strengthening the negative relationship, while its direct effect remains insignificant. This study contributes to the literature by providing firm-year evidence using the C-Score measure in a highly regulated and state-influenced banking sector. The findings offer policy implications for the Financial Services Authority and the Indonesia Stock Exchange in enhancing governance quality, transparency, and financial reporting standards.
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