Effect of Litigation, Taxes and Political Cost, and Debt Covenant of Accounting Conservatism

DOI: 10.5176/2251-1997_AF15.49

Authors: Dr. Rihfenti Ernayani and Intan Oviantari

Abstract:

This study aims to prove empirically whether the variable litigation (X1), taxes and political costs (X2), and the debt covenant (X3) influence on accounting conservatism (Y). Study uses secondary data, namely the annual financial statements food sector manufacturing companies listed in Indonesia Stock Exchange in 2011, 2012, and 2013. The results of this study indicate litigation partially not have a significant effect on accounting conservatism. Tax and Political Cost also had no effect on accounting conservatism, while the debt covenant has an influence on accounting conservatism. The results of this study simultaneously prove that the litigation, tax and political costs, and debt covenant have an influence on accounting conservatism.

Keywords: Litigation, Tax and Political Costs, debt covenant , Accounting Conservatism.