IMPACT OF LEVERAGE AND FINANCIAL DISTRESS ON ACCOUNTING CONSERVATISM

Abstract

This study objective is to determine whether and how exposure to financial stress and leverage can prompt accountants to exercise greater caution when working with numerical data. The investigation covered 165 manufacturing companies that were scheduled to be listed on the Indonesia Stock Exchange in 2020. For the purpose of this study, a purposive sampling technique was utilized to select a total of 52 different companies at random. The records of the company's finances that have been audited are the source of the secondary data. The approach taken in this study is primarily based on the use of quantitative methods. SPSS version 26's descriptive statistics, multiple linear regression, analysis requirements, classical assumption, and hypothesis testing features were utilized in order to conduct the analysis on the collected data. According to the findings of the study, there is no statistically significant connection between financial hardship and conservative accounting practices. Leverage does not significantly alter the cautious nature of accounting. Moreover, the combined effects of financial distress and leverage have little to no visible influence on the conservative accounting process.