Atik Isniawati

Universitas Sebelas Maret

Faculty of Economics, Universitas Darma Persada

Indonesia

atik.unsada@yahoo.co.id

Information asymmetry and accounting conservatism: Does analyst coverage moderate the results?

Rahmawati Rahmawati

Faculty of Economics and Business, Universitas Sebelas Maret

Indonesia

rahmaw2005@yahoo.com

Ardi Gunardi

Faculty of Economics and Business, Universitas Pasundan

Indonesia

ardigunardi@unpas.ac.id

Abstract. This study aims to examine the effect of information asymmetry on accounting conservatism moderated by analyst coverage. Net assets are measured to determine accounting conservatism. Information asymmetry is measured with the bid-ask spread, whereas analyst coverage is calculated using a proxy of analyst following. The sample in this research consists of manufacturing companies listed on the Indonesia Stock Exchange from 2010 to 2014. Data are gathered using purposive random sampling method, and the financial statement reports of 124 companies are selected. Regression test results are consistent with the hypothesis, that is, a positive correlation exists between information asymmetry and accounting conservatism. Additional evidence shows that the level of analyst coverage affects the relationship between information asymmetry and accounting conservatism. A high level of analyst coverage reduces the level of information asymmetry and decreases that of conservatism in financial statements.

Received: March, 2018

1st Revision: May, 2018

Accepted: August, 2018

DOI: 10.14254/2071-

8330.2018/11-3/15

JEL Classification: M41

Keywords: accounting conservatism; information asymmetry; analyst coverage; Indonesia