Effect of Earnings Management on Cost of Debt Before and After International Standard Financial Reporting Implementation
- DOI
- 10.2991/ebic-17.2018.35How to use a DOI?
- Keywords
- Management; Cost of Debt; IFRS
- Abstract
A business environment with high competition requires higher efficiency, not just operating efficiency but also the funding efficiency. One of the causes of funding inefficiency is the high cost of debt as a result of earnings management practices that can reduce investor confidence in the company's financial statements. The practice of earnings management has attracted practitioners, researchers, and regulators by develop various detecting models and develop standards such as International Financial Reporting Standard (IFRS). To analyze influence the effect of earnings management on cost of debt, this study uses three approaches: competing-component model, business model, and discretionary revenue model. The approach used is to review the capability of the linear regression model that is formed and to perform comparative analysis among the regression models formed by data from manufacturing companies listed in the Indonesia Stock Exchange for the years 2007-2011 as data before the IFRS implementation and 2012-2015 for data after the IFRS implementation. Based on the results of data processing obtained evidence that earnings management negatively affect the cost of debt using the three approaches but the model formed with business model approach has stronger than the regression equation formed with other models. When compared to the period before and after the implementation of IFRS, seen earnings management practices have decreased and the effect on the cost of debt becomes smaller.
- Copyright
- © 2018, the Authors. Published by Atlantis Press.
- Open Access
- This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Cite this article
TY - CONF AU - Chandra Situmeang AU - Azhar Maksum AU - Mrs Erlina AU - Tavi Supriana PY - 2018/01 DA - 2018/01 TI - Effect of Earnings Management on Cost of Debt Before and After International Standard Financial Reporting Implementation BT - Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017) PB - Atlantis Press SP - 229 EP - 234 SN - 2352-5428 UR - https://doi.org/10.2991/ebic-17.2018.35 DO - 10.2991/ebic-17.2018.35 ID - Situmeang2018/01 ER -