Management Compensation Schemes and the Choice of Accounting Methods

AYUDHITA SWARI GARINI, Sally Kurpierz

2015 | Skripsi | AKUNTANSI

Akar permasalahan dari konflik agensi di suatu perusahaan adalah konflik kepentingan antara pemegang saham sebagai principal dan manajer sebagai agent. Sistem insentif didesain untuk meminimalkan konflik kepentingan tersebut. Akuntansi punya peran penting di dalam sistem insentif karena digunakan dalam perhitungan laba.Meskipun akuntansi dinilai sebagai alat yang cukup objective dalam pengukuran kinerja, manajer dapat memilih standar akuntansi yang digunakan. Di sisi lain, kebijaksaan ini menciptakan kesempatan bagi manajer untuk terlibat dalam manajemen laba. Skripsi ini membahas bagaimana pilihan metode pembiayaan persediaan dapat dimanfaatkan untuk memaksimalkan keuntungan manajer.Dalam kompensasi berbasis laba, manajer memilih metode FIFO untuk meningkatkan laba yang dapat meningkatkan kompensasi mereka. Sedangkan dalam kompensasi berbasis stock, manager dapat menurunkan laba sebelum tanggal pemberian option atau stock dengan memilih metode weighted average, dan dapat menaikkan laba sebelum exercise date dengan memilih metode FIFO.

The root of agency problem in a firm is the conflict of interest between shareholders as principal and managers as agent. Incentive system (e.g. compensation schemes) is designed to minimize such conflict of interest. Furthermore, accounting plays a significant role in the incentives system, since it is used in the calculation of earnings, which compensation is based on. Although accounting is considered as objective tools in performance measurement, it allows managers to choose between accounting standards. On the other hand, such room for discretion creates opportunity for managers to engage in earning management. This thesis analyzes how choice of inventory costing methods can be utilized to maximize managers' own benefit (i.e. compensation pay). Under earnings-based compensation, manager would choose FIFO methods to increase their reported earnings thus increasing their pay. Whereas, in stock-based compensation, managers manipulate earnings downwards prior to stocks or option grant by choosing weighted average methods, and manipulate earnings upwards prior to option exercise by choosing FIFO method.

Kata Kunci : earning management, management compensation, and inventory costing methods.