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Real activities manipulation (RAM) and accrual-based earning management before and after IFRS adoption in Indonesia
Dyah Purwanti

Pusdiklat KNPK, Badan diklat Keuangan,
Kementerian Keuangan

The purpose of this study was to investigate the impact of the adoption of International Financial Reporting Standards (IFRS) on accrual earnings management and real earnings management. Adoption of accounting standards that impact the way the assessment, measurement and presentation.
The companys managers are trying to convey performance information of companies that meet the expectations of stakeholders, and the impact on the provision of compensation to managers and business investment decisions. Managers use the flexibility in selecting methods and accounting estimates in the presentation of accounting information. Accrual accounting allows managers to choose accounting methods and estimates that are beneficial to the manager. In addition to using the flexibility of accrual accounting, the manager also uses manipulation of real activity associated with operational activities to raise the profit figures. Managers can increase sales on a large scale at the end of the year, whether with large discounts to boost sales or credit. In addition, managers can build a large enough inventory to decrease the cost of goods sold and made a profit increase. In addition, managers can cut the cost burden discretional such as advertising expenses, the burden of research and development.
Using sample companies listed in the Indonesia Stock Exchange, in the timeframe 2008-2015, along with the development of multinational companies, the need for internationally-based accounting standards are indispensable. The issue of the adoption of IFRS as a standard could push down profit management. Senjani (2012: 5) suspect behavior changed after the earnings management practices of companies applying IFRS from the accrual basis to the real basis for an effective change in the standard per-2012 may affect the behavior of management. If prior to the adoption of IFRS, the company has a tendency to do accrual earnings management but after the adoption of IFRS companies tend to real earnings management.
The focus of the present study was the real earnings management by using a cost approach which refers to the measurement of production developed by Roychowdhury (2006). The results of the calculations and observations of real earnings management is done with such approaches will be analyzed and described by the industry sectors that are grouped and classified based on their respective industries sector to know the company and sectors of industry, the allegedly Which real earnings management with the highest residual rate.

Topic: Financial Management and Accounting

PermaLink: http://bme.conference.upi.edu/pages/abstract.php?id=fc4cee25789faca7ce0b572991791bb1


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