Melinda Lydia Nelwan is a Senior Lecturer at Universitas Klabat (UNKLAB), Indonesia.  She holds a bachelor degree in Accounting from Universitas Klabat and Master of Commerce in Accounting from Australian National University, Australia.  Currently she is taking her PhD Commerce in Accounting and Finance at the Adventist University of the Philippines.

Melinda Lydia Nelwan

Adventist University of the Philippines


This study examined whether accounting-based earnings quality moderates conditional conservatism.  Although extensive research has been done in this area, most of those studies are focused on developed countries and on different attributes of earnings quality.  Additionally, there is little knowledge on the moderating effect of different accounting-based earnings quality which arguably capture unique earnings feature.  Focusing on publicly listed manufacturing companies in Indonesia for the period of 2014 to 2017, this study utilized a panel data regression with fixed effects. Results revealed that stock return is value relevant information to the market and earnings quality moderates accounting conservatism.  Earnings persistence and smoothness are found to increase earnings informativeness.  In relation to conservatism, it is evident that earnings persistence reduces accounting conservatism and indicates that as the earnings become more persistence, firms tend to report less conservatively.  Similarly, it is found that earnings smoothness negatively moderates conservatism which means as earnings become smoother, firms are more likely to report bad news less timely.  Finally, the results showed that abnormal accruals decrease earnings informativeness and positively moderate conservatism. It provides indication that abnormal accruals dampen earnings quality; hence, cause firms accounting reports to be more conservative.

Keywords:abnormal accruals, conditional conservatism, earnings persistence, earnings quality, earnings smoothness