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Accrual Management and Firm-Specific Risk

Author

Listed:
  • Yuni Pristiwati Noer Widianingsih

    (Accounting Department, STIE Swasta Mandiri, Surakarta 57156, Indonesia
    Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Doddy Setiawan

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Y. Anni Aryani

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

  • Evi Gantyowati

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia)

Abstract

Firm-specific risk causes opinion differences on whether it relates to price informativeness or errors. The main difference is related to the disparity in information transparency. Therefore, this study tests the relationship between accrual management and firm-specific risk based on information transparency. It was conducted on firms listed on the Indonesia Stock Exchange from 2015 to 2019. The results showed that accrual management positively affects specific risks, which is strengthened by information asymmetry. These results indicate that accrual management has the potential to occur in environments with low transparency or high information asymmetry. Accrual management inhibits actual information, causing errors in stock price assessments that indicate firm-specific risk. This proves that firm-specific risk shows a price error. These results are consistent with previous studies that discretionary accruals can measure earnings quality by considering the firm’s fundamental factors reflected in how non-discretionary accruals affect firm-specific risk. This study shows that risk fluctuates depending on firm-specific information.

Suggested Citation

  • Yuni Pristiwati Noer Widianingsih & Doddy Setiawan & Y. Anni Aryani & Evi Gantyowati, 2022. "Accrual Management and Firm-Specific Risk," IJFS, MDPI, vol. 10(4), pages 1-12, November.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:4:p:111-:d:989052
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    References listed on IDEAS

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