YOGYAKARTA- Accounting conservatism, voluntary disclosure and life cycle stages have influenced value relevance and the difference in relevance of accounting/non-accounting information values. When company managers are assessed low by investors to expand voluntary disclosures to correct low market appraisal, the market appraisal of voluntary disclosure is greater for companies that are perceived as following conservative accounting practices compared to companies that use aggressive accounting procedure.
This was delivered by Lodovicus Lasdi, S.E, M.M, in his doctoral exam at the Audio Visual Room Faculty of Economics and Business on Friday (17/6). Lodovicus in his exam raised the dissertation entitled Influence of Accounting Conservatism, Voluntary Disclosure and Corporate Life Cycle Stage in Corporate Equity Appraisal ‘.
The research found that market differently evaluates accounting information of companies in different life cycle stages and accounting conservatism affects the relationship between life cycle stages and corporate appraisal. "But, because of the limited number of study samples, especially for companies with voluntary disclosure, the research could not explore further the type and level of voluntary corporate disclosures. As a result, data variability is low that the influence of voluntary disclosure and accounting conservatism is weak in some testing," Lodovicus said in front of the examiner team.
Another factor is the proxy of market reaction to the difference in value relevance of cash flows and accrual operation. Lodovicus’ research also shows that the market reaction is proxied with stock returns in the period of three months after the disclosure of annual report. The number of shares that are not actively traded and the accuracy of the date of publication of annual report according to Lodovicus cause the difficulty in identifying precisely the market reaction to the publication of the annual report. "It would be difficult to identify the market reaction to the publication of the annual report if there are still many stocks which are not actively traded," the faculty of Accounting Department, Unika Widya Mandala Surabaya said.
Meanwhile, voluntary disclosure can be done better when the variability of data of voluntary disclosure is more diverse. Research will be more robust if the type of voluntary disclosure is not only based on annual reports alone and the level of voluntary disclosure is more diverse. "With these results, it is hoped further research would accurately identify the publication of annual report or other voluntary disclosures, and the research will be more robust because stock returns that are used indicate the real market reaction to the publication of voluntary disclosure," the man born in Surabaya on 13 September 1972 said.
Lodovicus is sure that his dissertation in practice, particularly for investors, creditors and other stakeholders, accounting conservatism can be used as an indicator of the credibility of voluntary disclosure. The impact of the global financial crisis is stakeholders demand companies to be more transparent. This means that companies must disclose more information to the public. "Disclosure of information which is voluntary does not have the auditing mechanism. Here is the role of accounting conservatism in supporting the credibility of corporate information disclosure. Selection of conservative accounting method shows that the company will also reveal other information conservatively," Lodovicus explained.
In addition, in the policy implication, the result of this study provides evidence for the influence of accounting conservatism on the valuation of corporate equity. Such findings can later be used by the standard setters and regulators as a material consideration in setting standards and the proposed rule to limit or eliminate the option of conservatism.
After maintaining his dissertation, Lodovicus passed very satifactorily. Attending team of examiners are Prof. Dr. Zaki Baridwan, M.Sc., Prof. Dr. Suwardjono, M.Sc., Dr.. Sony Warsono, M.A.F.I.S., Prof. Dr. Slamet Sugiri, M.B.A., Prof. Dr. Indra Wijaya Kusuma, M.B.A., Dr. Eko Widodo, M.Sc., Dr. Gudono, M.B.A., and Dr. Mahfud Sholihin, M. Acc.