Presenting financial information are required on the precautionary principle, namely to record re... more Presenting financial information are required on the precautionary principle, namely to record revenues, expenses, and assets. The principle of conservatism in the presentation of accounting information do not recognize an increase in unrealized assets. However, recognizing an decrease of assets, although not yet realized. Conservative financial reports can reduce the agency costs and information asymmetry. The purpose of this paper is to review some of the research on financial reporting conservatism in terms of agency theory. From the review indicate that the financial statements using accounting conservatism principle can reduce the information asymmetry in agency theory and management to prevent manipulation of financial statements.
Presenting financial information are required on the precautionary principle, namely to record re... more Presenting financial information are required on the precautionary principle, namely to record revenues, expenses, and assets. The principle of conservatism in the presentation of accounting information do not recognize an increase in unrealized assets. However, recognizing an decrease of assets, although not yet realized. Conservative financial reports can reduce the agency costs and information asymmetry. The purpose of this paper is to review some of the research on financial reporting conservatism in terms of agency theory. From the review indicate that the financial statements using accounting conservatism principle can reduce the information asymmetry in agency theory and management to prevent manipulation of financial statements.
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