What Factors Affect Conservatism? The Role of Board Gender, CEO Retirement and Financial Distress
DOI:
https://doi.org/10.23887/jia.v8i2.62217Keywords:
accounting, conservatism, board gender, CEO retirement, financial distressAbstract
This research aims to comprehensively analyze the intricate relationships between board gender, CEO retirement, financial distress, and accounting conservatism within the energy sector. Leveraging 164 firm-year observations spanning 2019-2021, our sample selection relied on a purposive sampling technique, with data availability serving as a primary criterion. Through multiple regression analysis, we rigorously tested hypotheses to unveil the nuanced dynamics at play. Contrary to expectations, our findings suggest that board gender does not exert a significant impact on accounting conservatism within energy firms. However, CEO retirement emerges as a pivotal factor positively influencing accounting conservatism. This illuminates the importance of leadership transitions in shaping conservative financial reporting practices. Notably, financial distress demonstrates a contrary effect, negatively impacting accounting conservatism. This novel perspective positions financial distress as a determinant factor, expanding the traditional boundaries of conservatism research within the agency theory framework. Our research significantly contributes to the literature by providing fresh insights into the contextual factors influencing accounting conservatism in the energy sector. The nuanced interplay of CEO retirement and financial distress unveils complex decision-making processes, offering practical implications for corporate governance and financial reporting practices in this industry. This study serves as a valuable resource for both practitioners and scholars seeking a deeper understanding of conservatism determinants in the specific context of energy companies.
References
Abdi, M., Kazemiolum, M., Mohammadpoorzanjani, M., & Parvizi, A. (2019). Gender Diversity within Audit Committee, Board of Directors and Chief Financial Officer and Disclosure of Corporate Social Responsibility: An Altruism Theory Test. Accounting and Auditing Review, 26(4), 544–569. https://doi.org/10.22059/acctgrev.2020.281539.1008178
Agyemang Osei, A., Yusheng, K., Ayamba Caesar, E., Kissiwaa, A. T., & Shaibu, A. (2019). Impact of Board Characteristics on Corporate Social Responsibility Disclosure in Ghana. International Journal of Sciences: Basic and Applied Research (IJSBAR) International Journal of Sciences: Basic and Applied Research, 46(1), 104–116.
Al-Qudah, L. A., Ahmad Qudah, H., Abu Hamour, A. M., Abu Huson, Y., & Al Qudah, M. Z. (2022). The effects of COVID-19 on conditional accounting conservatism in developing countries: Evidence from Jordan. Cogent Business and Management, 9(1). https://doi.org/10.1080/23311975.2022.2152156
Anagnostopoulou, S. C., Tsekrekos, A. E., & Voulgaris, G. (2021). Accounting conservatism and corporate social responsibility. British Accounting Review, 53(4). https://doi.org/10.1016/j.bar.2020.100942
Ashraf, U., Peterson, A. T., Chaudhry, M. N., & Cobos, M. E. (2023). Global ecological niche conservatism and evolution in Olea species. Saudi Journal of Biological Sciences, 30(1), 103500. https://doi.org/10.1016/j.sjbs.2022.103500
Balasubramanian, S. A., Radhakrishna, G. S., Sridevi, P., & Natarajan, T. (2019). Modeling corporate financial distress using financial and non-financial variables: The case of Indian listed companies. International Journal of Law and Management, 61(3–4), 457–484. https://doi.org/10.1108/IJLMA-04-2018-0078
Biduri, S., Maryanti, E., & Ahmed, E. R. (2023). Does Board Gender Diversity Affect Accounting Conservatism and Financial Performance? AKRUAL: Jurnal Akuntansi, 14(2).
Brier, J., & lia dwi jayanti. (2020). Pengaruh Tingkat Kesulitan Keuangan Perusahaan, Risiko Litigasi, Struktur Kepemilikan Manajerial dan Debt Convenant Terhadap Konservatisme Akuntansi. 21(1), 1–9.
Chang, X., Hilary, G., Kang, J., & Zhang, W. (2013). Does Conditional Accounting Conservatism Impede Corporate Innovation?
Chen, S., Ni, S. X., & Zhang, F. (2018). CEO retirement, corporate governance and conditional accounting conservatism. European Accounting Review, 27(3), 437–465.
Chipeta, C., Aftab, N., & Machokoto, M. (2021a). The implications of financial conservatism for African firms. Finance Research Letters, 42(October 2020), 101926. https://doi.org/10.1016/j.frl.2021.101926
Chipeta, C., Aftab, N., & Machokoto, M. (2021b). The implications of financial conservatism for African firms. Finance Research Letters, 42, 101926. https://doi.org/10.1016/j.frl.2021.101926
Çolak, G., & Korkeamäki, T. (2021). CEO mobility and corporate policy risk. Journal of Corporate Finance, 69, 102037. https://doi.org/10.1016/j.jcorpfin.2021.102037
Couwenberg, O. (2015). Financial Distress. Wiley Encyclopedia of Management, 5(1), 1–3. https://doi.org/10.1002/9781118785317.weom040039
Cyprian Onyekwere, S., Wesiah, S., & Nuuman Danbatta, S. (2019). The Relationship Between Board Diversity and Corporate Financial Performance: <i>Empirical Evidence from Five Selected Commercial Banks in Nigeria</i> International Journal of Finance and Banking Research, 5(4), 76. https://doi.org/10.11648/j.ijfbr.20190504.13
D’Augusta, C., & Grossetti, F. (2023). How did Covid-19 affect investors’ interpretation of earnings news? The role of accounting conservatism. Finance Research Letters, 52(November 2022), 103504. https://doi.org/10.1016/j.frl.2022.103504
Duong, K. T. (2021). Managerial Conservatism and Corporate Policies Kiet Tuan Duong ‡ § , Chiara Banti ** , Norvald Instefjord **. Journal of Cleaner Production, 1–54.
Duong, K. T., Banti, C., & Instefjord, N. (2021). Managerial conservatism and corporate policies. Journal of Corporate Finance, 68(April), 101973. https://doi.org/10.1016/j.jcorpfin.2021.101973
Farooq, M., Qureshi, S. F., & Bhutta, Z. M. (2021). Indirect financial distress costs in non-financial firms: Evidence from an emerging market. Pacific Accounting Review, 33(4), 417–434. https://doi.org/10.1108/PAR-09-2020-0127
Faulkner, M., Frost, T., & García-Feijóo, L. (2020). The impact of CEO past corporate experiences on accounting conservatism. Available at SSRN 3985114.
Garanina, T., & Kim, O. (2023). The relationship between CSR disclosure and accounting conservatism: The role of state ownership. Journal of International Accounting, Auditing and Taxation, 100522. https://doi.org/10.1016/j.intaccaudtax.2023.100522
Garcia-Blandon, J., Argilés-Bosch, J. M., & Ravenda, D. (2019). Is there a gender effect on the quality of audit services? Journal of Business Research, 96(November 2018), 238–249. https://doi.org/10.1016/j.jbusres.2018.11.024
Gestanti, L. (2017). Keywords: CEO age , Return on asset , size , capital expenditure , firm age memproduksi lebih dari satu tahun. Maka semakin tinggi produksi diharapkan semakin tinggi penjualan dan keuntungan. Dengan demikian dapat dihipotesiskan: H3: Capital expendit. 1–5.
Ho, S. S., Li, A. Y., Tam, K., & Zhang, F. (2015). CEO gender, ethical leadership, and accounting conservatism. Journal of Business Ethics, 127, 351–370.
Hu, N., Huang, R., Li, X., & Liu, L. (2017). The impact of CEOs’ accounting backgrounds on earnings management and conservatism. Journal of Centrum Cathedra.
Kazemi Olum, M., Imani Barandagh, M., & Abdi, M. (2019). Impacts of gender diversity in board of directors and audit committee on earnings quality. Journal of Accounting Knowledge, 10(1), 137–168. https://doi.org/10.22103/jak.2019.11887.2655
Khalifa, M., Trabelsi, S., & Matoussi, H. (2022). Leverage, R&D expenditures, and accounting conservatism: Evidence from technology firms. The Quarterly Review of Economics and Finance, 84, 285–304. https://doi.org/10.1016/j.qref.2022.02.002
Li, F., Li, T., & Minor, D. (2016a). CEO power, corporate social responsibility, and firm value: A test of agency theory. International Journal of Managerial Finance, 12(5), 611–628. https://doi.org/10.1108/IJMF-05-2015-0116
Li, F., Li, T., & Minor, D. (2016b). CEO power, corporate social responsibility, and firm value: A test of agency theory. International Journal of Managerial Finance, 12(5), 611–628. https://doi.org/10.1108/IJMF-05-2015-0116
Li, X., Goodell, J. W., Liao, J., Yao, S., & Liu, X. (2022). Does executive gender diversity supply accounting conservatism in traditional societies? Evidence from CEO-CFO combinations in China. Finance Research Letters, 48, 102946. https://doi.org/10.1016/j.frl.2022.102946
Liao, J., Smith, D., & Liu, X. (2019). Female CFOs and accounting fraud: Evidence from China. Pacific Basin Finance Journal, 53, 449–463. https://doi.org/10.1016/j.pacfin.2019.01.003
Liao, S., Nguyen, N. H., & Truong, C. (2023). Does CEO extraversion pay off when in need? Evidence from the global financial crisis. The British Accounting Review, 101234. https://doi.org/10.1016/j.bar.2023.101234
Olowookere, J. K., Oyewole, O. M., & Lamidi, W. A. (2021). Effects of Audit Committee Diversity on Financial Reporting Quality among Listed Consumer Goods Companies in. Joornal of Accounting and Management, 11(3), 111–120.
Pan, X. (2017). Accounting conservatism, bank lending and firm investment: Evidence from a quasi-experiment of China’s stimulus package. Pacific-Basin Finance Journal, 44, 64–79. https://doi.org/10.1016/j.pacfin.2017.06.004
Pereira, C., Monteiro, A. P., Barbosa, F., & Coutinho, C. (2021). Environmental sustainability disclosure and accounting conservatism. International Journal of Advanced and Applied Sciences, 8(9), 63–74. https://doi.org/10.21833/IJAAS.2021.09.009
Rezaee, S. (2021). CEO Powerful Features on Conditional and Unconditional Conservatism. Turkish Journal of Computer and Mathematics Education (TURCOMAT), 12(13), 4542–4547.
Savitri, E. (2016). Konservatisme Akuntansi: Cara Pengukuran, Tinjauan Empiris dan Faktor-Faktor yang Mempengaruhinya. Pustaka Sahila Yogyakarta, 1, 103.
Simionescu, L. N., Gherghina, Ş. C., Tawil, H., & Sheikha, Z. (2021). Does board gender diversity affect firm performance? Empirical evidence from Standard & Poor’s 500 Information Technology Sector. Financial Innovation, 7(1). https://doi.org/10.1186/s40854-021-00265-x
Sukandani, Y., Istikhoroh, S., Widodo, U. P. W., & Syahdu, N. N. (2021). The Role of Accounting Conservatism As a Moderate of Debt Ratio Effect on Financial Distress. International Journal of Economics, Business and Accounting Research (IJEBAR), 5(2), 267–275.
Tazkiya, H., & Sulastiningsih, S. (2020). Pengaruh Growth Opportunity, Financial Distress, Ceo Retirement Terhadap Konservatisme Akuntansi. Kajian Bisnis STIE Widya Wiwaha, 28(1), 13–34. https://doi.org/10.32477/jkb.v28i1.375
Triyani, A., Setyahuni, S. W., & Kiryanto, K. (2020). The Effect Of Environmental, Social and Governance (ESG) Disclosure on Firm Performance: The Role of Ceo Tenure. Jurnal Reviu Akuntansi Dan Keuangan, 10(2), 261. https://doi.org/10.22219/jrak.v10i2.11820
Ud Din, N., Cheng, X., Ahmad, B., Sheikh, M. F., Adedigba, O. G., Zhao, Y., & Nazneen, S. (2021). Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality. Economic Research-Ekonomska Istrazivanja , 34(1), 1170–1189. https://doi.org/10.1080/1331677X.2020.1820357
Varadina, A. P. D., & Diatmika, N. G. A. (2018). Hubungan Ceo Gender dan Leverage Dengan Konservatisme Akuntansi Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia Periode 2015-2017. Jurnal Ilmiah Akuntansi Dan Bisnis, 3(1), 36–45.
Widhiastuti, R., & Rahayu, S. (2022). The Role of Financial Distress in Mediating The Accounting Conservatism Practices. AKRUAL: Jurnal Akuntansi, 13(2), 201–213. https://doi.org/10.26740/jaj.v13n2.p201-213
Wijaya, K., Feby, D., Kesaulya, A., & Feby, K. W. (2022). 62 | Efek Indonesia (Bei). 62–76.
Xu, C., & Yan, M. (2014). Radical or incremental innovations: R&D investment around CEO retirement. Journal of Accounting, Auditing & Finance, 29(4), 547–576.
Younas, N., UdDin, S., Awan, T., & Khan, M. Y. (2021). Corporate governance and financial distress: Asian emerging market perspective. Corporate Governance (Bingley), 21(4), 702–715. https://doi.org/10.1108/CG-04-2020-0119
Downloads
Published
Issue
Section
License
Copyright (c) 2023 Agus Triyani, Sri Retnoningsih, Suhita Whini Setyahuni, Muhammad Fajar Khoiruddin
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
JIA (Jurnal Ilmiah Akuntansi) is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and greater citation of published work (See The Effect of Open Access).
1.png)
