This practice is affected by how human evaluate series of numbers. Most of the prices we see are not in round number such as 100,000 but in the form of unrounded number such as 99,999. We do transactions every day and price is part of it. Introduction Numbers have become parts of our daily lives. SIMPOSIUM NASIONAL AKUNTANSI XVI Manado, 25-28 September 2013įile ini diunduh dari: SESI I/1 Pradita Nareswari dan Hilda Rossieta Keywords: cosmetic earnings management, upward rounding, cognitive reference points, Benford’s This paper will shed some light about cosmetics earnings management practice in ASEAN and some factors that might be useful for the investor to estimate the level of cosmetic earnings management in a country. Meanwhile Spearman correlation is used to detect any correlation between cosmetics earnings management with each of the factors. This research using Benford’s Law to detect cosmetic earnings management. The factors are individualism, uncertainty avoidance, economic growth, relative firm size, corruption, and economic freedom.
The objective of this research are detecting the practice of cosmetics earnings management in ASEAN and testing some factors that may have correlation with cosmetics earnings management. These practices are based on cognitive reference point theory. This is mainly done when the second digit of earnings is a big number, such as 9, so that a little upward rounding can change the second digit to 0 and lift up the first digit. PRADITA NARESWARI HILDA ROSSIETA Universitas IndonesiaĪbstract: Cosmetic earnings management is opportunistic management by doing little upward rounding in the second digit of the earnings to lift up the first digit by one point.
SESI I/1 Pradita Nareswari dan Hilda RossietaĬosmetic Earnings Management in ASEAN Countries: Detection Method Using Benford’s Law