The Influence of Litigation Risk, The Financial Distress and The Ownership Managerial Structure on Aaccounting Conservatism

Abstract

This study aims to examine the effect of Litigation Risk on Conservatism Accounting, The Financial Distress effect on accounting conservatism and the influence of Ownership Managerial Structure on Accounting Conservatism. In this study, Litigation Risk is measured by using Levit; Financial Distress is measured by using a model of Altman; Managerial Ownership Structure is measured by dividing the number of shares by the number of managerial shares outstanding; and Accounting Conservatism is measured by using the Net Operating Accrual. Test equipment used in this research is multiple regression analysis. In addition, the population in this study is the Food and Beverage Company listed on the Stock Securities Indonesia (BEI) by using nonprobability sampling technique, which is a purposive sampling technique as many as 11 companies in the period of 2010-2013. The results obtained in this study is that the risk of litigation partially positive effect on accounting conservatism, financial distress has partial effects on accounting conservatism, and ownership structure managerial partially has no effect on accounting conservatism. Changes in the risk of litigation is proportional to accounting conservatism, so it has a positive sign; changes in financial distress is proportional to accounting conservatism, so it has a positive sign; whereas changes managerial ownership structure is inversely related to accounting conservatism, so it has a negative sign.