Board of Director Characteristics, Institutional Ownership, and Accounting Conservatism

Abstract:

One of the determinants of conservatism is Board of Directors (BoD) characteristics. Several studies have examined the relationship between board characteristics and accounting conservatism. Nonetheless, previous empirical findings show heterogeneous and inconclusive results. This study aims to prove the role of board characteristics, namely board female, board expertise, board overconfidence, and board size in accounting conservatism. This study also examines institutional ownership as moderating variable. This research was conducted on 118 manufacturing companies for three periods, namely 2017-2019. The data analysis technique used is Partial Least Square. The test results prove that board female and board expertise increase accounting conservatism, while board overconfidence reduces conservatism. However, there is no relationship between board size and accounting conservatism. This study also indicates that institutional ownership strengthens the relationship between board females and board expertise to accounting conservatism. Contrary, institutional ownership fails as moderating variable between board size and accounting conservatism relationship. In testing the board overconfidence variable, the percentage of institutional ownership variable cannot be a moderating variable. Nevertheless, the interaction between board overconfidence and the number of institutional investors has a negative effect on accounting conservatism.

Abstrak:

Salah satu faktor penentu praktik konservatisme adalah karakteristik dewan direksi. Sejumlah penelitian telah menguji hubungan karakteristik dewan direksi dan konservatisme akuntansi. Meskipun demikian, temuan empiris sebelumnya menunjukkan hasil yang heterogen dan tidak meyakinkan. Penelitian ini bertujuan untuk membuktikan peran karakteristik dewan direksi, yaitu direksi perempuan, keahlian direksi, sikap overconfidence direksi, dan ukuran direksi terhadap konservatisme akuntansi. Studi ini juga menguji peran kepemilikan institusional sebagai variabel moderasi. Penelitian ini dilakukan pada 118 perusahaan manufaktur untuk tiga periode amatan, yaitu tahun 2017-2019. Teknik analisis data yang digunakan adalah Partial Least Square. Hasil pengujian membuktikan bahwa direksi perempuan dan keahlian direksi meningkatkan konservatisme akuntansi sedangkan board overconfidence menurunkan konservatisme. Meskipun demikian, tidak ada hubungan antara ukuran direksi dan konservatisme akuntansi. Studi ini juga mengindikasikan bahwa kepemilikan institusional memperkuat hubungan direksi perempuan dan keahlian direksi terhadap konservatisme akuntansi. Sebaliknya, kepemilikan institusional gagal sebagai variabel moderasi dalam hubungan ukuran direksi dan konservatisme akuntansi. Dalam pengujian variabel sikap overconfidence direksi, persentase kepemilikan institusional tidak berperan sebagai variabel moderasi. Namun, interaksi antara sikap overconfidence direksi dan jumlah investor institusional berpengaruh negatif terhadap konservatisme akuntansi.