Sasono Adi | University of Indonesia (original) (raw)
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Income smoothing is the intentional reduction of reported earnings fluctuations with respect to s... more Income smoothing is the intentional reduction of reported earnings fluctuations with respect to some "target" level or trend. This study investigates whether auditor quality or the presence of audit committees is associated with income smoothing by managers of Australian firms. It is motivated by the lack of evidence of an association between income smoothing and corporate governance structures. Discretionary accruals, estimated using a :- cross-sectional accruals model, are used as a proxy for earnings management, and smoothing is measured as the excess of (a) the difference between actual reported operating profit before taxes and targeted operating profit before taxes over (b) the difference between targeted operating profit before taxes and pre-managed earnings. The smaller the excess, the more smoothing takes place. This study is mostly inconclusive about whether auditor quality is associated with income smoothing. In contrast, the presence of an audit committee has no association with smoothing. While they are inconclusive, the results generally do not support predictions that the more firms use audit committees and high quality auditors, in combination, the less likely they are to smooth reported income. Australian firms tend to smooth reported earnings more than their US counterparts. While the difference may be attributable to international differences in requirements for the use of an audit committee, again the results are not conclusive.
Asia-Pacific Journal of Accounting, 1999
ABSTRACT In this study we examine whether managers of Australian listed companies are more likely... more ABSTRACT In this study we examine whether managers of Australian listed companies are more likely to smooth corporate earnings as the political cost exposure of the firm and its management increases. We find that the incidence of smoothing increases as the firm's ratio of executive compensation to operating profits increases, and the higher the market concentration of the industry in which the firm operates. We argue that the former relation arises because managers attempt to avoid possible negative repercussions arising from apparent high compensation relative to returns to shareholders. Such repercussions could include revisions of their management compensation plans, or insecurity of job tenure. We also find that firms in industries with high market concentration smooth earnings more than firms in industries with low market concentration. This is consistent with attempts to avoid earnings peaks that can lead to accusations of profiteering at the expense of consumers. However, this latter finding is not robust to differences in sampling or alternative measures of income smoothing. Overall, the evidence indicates that managers smooth reported earnings to avert attention from recurring circumstances that can expose the firm and its managers to political scrutiny and criticism.
This study aims to investigate wether there is a significant effect on the role of independent co... more This study aims to investigate wether there is a significant effect on the role of independent commissioner and audit committees in relation to agency problems of corporate financial structure. Simultaneous linear regression is used. Empirical tests conducted on listed manufacturing companies by using purposive sampling. The results show that there is a negative relationship between the existance of an independent commissioner with the level of leverage. These findings demonstrate that the role of independent commissioners in an effort to reduce the risk of default. But no significant evidence is obtained that the existence of an independent commissionermay reduce agency problems in the prensence of managerial ownership. It also shows that the existence of an audit committee may reduce the managers’ incentives to perform opportunistic actions in determining the financing structure. The result of this study also indicate that leverage can be an alternative to monitor the managerial o...
Cogent Business & Management, 2016
The study aims to assess the quality of disclosure in performance of the local administration rep... more The study aims to assess the quality of disclosure in performance of the local administration report (LAR) in the local government which is published on the websites. Quality criteria are based on: (1) the information that should be disclosed according to the regulations; and (2) the comprehensibility format of the report. Using the content analysis, the results showed that the information published only disclosed 35.46% of the information that should be conveyed. The low quality of disclosure is caused by the absence of disclosing standard of the LAR. The types of information which are not presented or inadequately covered are only a small portion of information displayed uses graphs and tables, and information about performances and its measurements are not presented in a systematic way. Format of presentation consisted of a summary with very long narrative does not guarantee that the important information is conveyed sufficiently to the public. From these results, it is expected for the regulator to develop a disclosing manual of LAR containing types of information and format of presentation which can help the public comprehend the information. The findings of this work show that the quality of the transparency of the reporting made by public bodies becomes crucial for public accountability.
Income smoothing is the intentional reduction of reported earnings fluctuations with respect to s... more Income smoothing is the intentional reduction of reported earnings fluctuations with respect to some "target" level or trend. This study investigates whether auditor quality or the presence of audit committees is associated with income smoothing by managers of Australian firms. It is motivated by the lack of evidence of an association between income smoothing and corporate governance structures. Discretionary accruals, estimated using a :- cross-sectional accruals model, are used as a proxy for earnings management, and smoothing is measured as the excess of (a) the difference between actual reported operating profit before taxes and targeted operating profit before taxes over (b) the difference between targeted operating profit before taxes and pre-managed earnings. The smaller the excess, the more smoothing takes place. This study is mostly inconclusive about whether auditor quality is associated with income smoothing. In contrast, the presence of an audit committee has no association with smoothing. While they are inconclusive, the results generally do not support predictions that the more firms use audit committees and high quality auditors, in combination, the less likely they are to smooth reported income. Australian firms tend to smooth reported earnings more than their US counterparts. While the difference may be attributable to international differences in requirements for the use of an audit committee, again the results are not conclusive.
Asia-Pacific Journal of Accounting, 1999
ABSTRACT In this study we examine whether managers of Australian listed companies are more likely... more ABSTRACT In this study we examine whether managers of Australian listed companies are more likely to smooth corporate earnings as the political cost exposure of the firm and its management increases. We find that the incidence of smoothing increases as the firm's ratio of executive compensation to operating profits increases, and the higher the market concentration of the industry in which the firm operates. We argue that the former relation arises because managers attempt to avoid possible negative repercussions arising from apparent high compensation relative to returns to shareholders. Such repercussions could include revisions of their management compensation plans, or insecurity of job tenure. We also find that firms in industries with high market concentration smooth earnings more than firms in industries with low market concentration. This is consistent with attempts to avoid earnings peaks that can lead to accusations of profiteering at the expense of consumers. However, this latter finding is not robust to differences in sampling or alternative measures of income smoothing. Overall, the evidence indicates that managers smooth reported earnings to avert attention from recurring circumstances that can expose the firm and its managers to political scrutiny and criticism.
This study aims to investigate wether there is a significant effect on the role of independent co... more This study aims to investigate wether there is a significant effect on the role of independent commissioner and audit committees in relation to agency problems of corporate financial structure. Simultaneous linear regression is used. Empirical tests conducted on listed manufacturing companies by using purposive sampling. The results show that there is a negative relationship between the existance of an independent commissioner with the level of leverage. These findings demonstrate that the role of independent commissioners in an effort to reduce the risk of default. But no significant evidence is obtained that the existence of an independent commissionermay reduce agency problems in the prensence of managerial ownership. It also shows that the existence of an audit committee may reduce the managers’ incentives to perform opportunistic actions in determining the financing structure. The result of this study also indicate that leverage can be an alternative to monitor the managerial o...
Cogent Business & Management, 2016
The study aims to assess the quality of disclosure in performance of the local administration rep... more The study aims to assess the quality of disclosure in performance of the local administration report (LAR) in the local government which is published on the websites. Quality criteria are based on: (1) the information that should be disclosed according to the regulations; and (2) the comprehensibility format of the report. Using the content analysis, the results showed that the information published only disclosed 35.46% of the information that should be conveyed. The low quality of disclosure is caused by the absence of disclosing standard of the LAR. The types of information which are not presented or inadequately covered are only a small portion of information displayed uses graphs and tables, and information about performances and its measurements are not presented in a systematic way. Format of presentation consisted of a summary with very long narrative does not guarantee that the important information is conveyed sufficiently to the public. From these results, it is expected for the regulator to develop a disclosing manual of LAR containing types of information and format of presentation which can help the public comprehend the information. The findings of this work show that the quality of the transparency of the reporting made by public bodies becomes crucial for public accountability.