Independent Commissioner and Accounting Conservatism Managerial Ownership and Accounting Conservatism

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6. Growth Opportunities

Growth opportunities are opportunities for growth in a company in the future Mai 2006. The companys growth is expected by internal and external parties, due to good growth signaled for the development of the company. From the perspective of investors, the growth of a company is a sign the company has a favorable aspect, and the investor would expect a rate of return rate of return on investments carried out showed good development. Novikasari and Sofyan, 2013 Companies that have high growth rates have minimize motivation for profit. As Widya 2004 that the higher the rate of growth of a company, the higher the likelihood that the company is in choosing conservative accounting

7. Sales Growth

Sales are the main operating activities of a company. Sales growth can be interpreted as a change in sales per year. Growth in sales of a product depends on the product life cycle. According Kotlerdan Armstrong 1997 in Abdul Aziz 2005 there are four stages of the product life cycle that affect the sales growth that the companys sales growth will affect the rate of accrual at companies such as inventory, accounts receivable, and a high sales growth often increases the market expectation of cash flows the future so that it will affect the market conservatism Ahmed and Duellman, 2007 in the Padmawati and Fachrurrozie 2015.

B. Variable Interrelationship

1. Independent Commissioner and Accounting Conservatism

In carrying out its functions, independent directors will require accurate information and quality. Conservatis is a very useful tool for the board of directors 18 particularly the independent commissioner in carrying out their functions as decision makers and those who monitor management. A strong board of directors board of directors dominated by independent directors will require more quality information so that they will tend to be using more conservative accounting principles. On the other hand, the board of directors dominated by internal parties or board of directors who has a weak monitoring incentives will provide greater opportunities for managers to use more aggressive accounting principles less conservative Ahmed and Duellman, 2007. Based on these descriptions formulated the following hypotheses : H1: How Independent Commissioner has positive effect on Accounting Conservatism

2. Managerial Ownership and Accounting Conservatism

Research conducted by Ahmed and Duellman 2007 shows that there is a relationship between managerial ownership with conservative accounting policy of the company. Conflicts within the company can not be resolved when the contract runs because it will cause huge costs. It is forcing shareholders to complete the contract term of the contract is completed. The greater portion of managerial ownership, the greater the pressure from outsider to applying conservative accounting. Conservatism is considered capable of reducing the ability of managers to present net income and overstate assets by more recognized gain. Conservatism is also considered capable of reducing the behavior of managers who hide information about losses. Based on these descriptions formulated the following hypotheses : 19 H2: How Managerial Ownership has positive effect on Accounting Conservatism

3. Growth Opportunities and Accounting Conservatism