The Role of Debt Covenant in Moderating the Effects of Poilitical Cost on Accounting Conservatism


Authors : Nur Fatwa Basar; Andi Hendro

Volume/Issue : Volume 5 - 2020, Issue 9 - September

Google Scholar : http://bitly.ws/9nMw

Scribd : https://bit.ly/3kJ2LDM

DOI : 10.38124/IJISRT20SEP315

The purpose of this study was to analyze the direct effect of political cost and debt covenant on accounting conservatism. Besides, this study also analyzes the role of debt covenants as a moderator between the effect of political cost on accounting conservatism. The companies that are the samples are companies indexed on the IDX30 other than financial services companies and companies with non-rupiah financial reports. the data used is secondary data from the financial statements of 20 companies listed on the Indonesian stock exchange. data analysis using multiple linear regression and analysis of variance. The results showed that political cost directly affects accounting conservatism positively and significantly. whereas debt covenant does not have a direct significant effect on accounting conservatism. Besides, this study shows the role of debt covenants in strengthening the effect of political costs on accounting conservatism.

Keywords : Conservatism Accounting; Political Cost; Debt Covenant

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