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The Level of Conservatism in Accounting Policies and Its Effect on Earnings Management  [cached]
Suzan Abed,Jomana Al-Badainah,Jamal Abu Serdaneh
International Journal of Economics and Finance , 2012, DOI: 10.5539/ijef.v4n6p78
Abstract: This study investigates the level of conservatism in accounting policies and examines its effect on earnings management for a sample of 259 Jordanian Manufacturing companies during the period 2006-2009. The results indicate that there are differences on the level of conservatism between companies. Furthermore, the results of this study reveal that conservatism and size are negatively related to earnings management, whereas performance found to be positively related to earnings management.
The Effect of Client Importance and Auditor Tenure on Accounting Conservatism: Evidence from Chinese Companies  [cached]
Bing Yu,Mary Jane Lenard
International Business Research , 2012, DOI: 10.5539/ibr.v6n1p176
Abstract: The concern over accounting regulation has resulted in studies of auditor independence and audit quality, as measured by auditor tenure, accounting conservatism, and the type of audit firm the client employs (Big 4 or non-Big 4).In this study, we continue the line of research on conservatism and auditor tenure by examining whether accounting conservatism is related to auditor tenure for Chinese firms. We extend the studies by Jenkins and Velury (2008) and Li (2010) in order to examine Chinese firms that have non-Big 4 auditors, and we investigate whether the association exists for the most important and least important clients of these audit firms. Our findings indicate that least important clients employ more conservative accounting techniques as auditor tenure increases. For the most important clients, there is less conservatism, compared to the least important clients, in the early years of the auditor’s tenure. Our study provides more information about the regulatory issue of mandatory audit firm rotation because our results suggest that mandatory auditor rotation may have an adverse effect on the least important clients of these Chinese audit firms.
Succession of Family Firms and Accounting Conservatism  [PDF]
Ying Chen
Modern Economy (ME) , 2019, DOI: 10.4236/me.2019.101020

Using data of listed family firms and based on the multivariable regression model, this paper studies the changes in the quality of accounting information of family firms during the succession period as well as the regulating effect of successor’ characteristic variables—educational level on the relation between succession and accounting conservatism. The results show: The succession of family firms will improve the level of accounting conservatism, suggesting that after the succession, the leader’s personal authority and social capital declined, and the information disclosure level of the firm tends to be conservative; besides, the successors’ personal qualities, particularly the educational and professional background will have a significant impact on the accounting conservatism after taking over the corporate. It can be seen that as a special stage, the succession will affect the accounting information disclosure policy of family firms, and it shows strong heterogeneity with the succession.

Strategic Deviance and Accounting Conservatism  [PDF]
Rui Wang
American Journal of Industrial and Business Management (AJIBM) , 2018, DOI: 10.4236/ajibm.2018.85082
Abstract: This paper considers the influence of corporate strategic positioning on the firm’s accounting conservatism from the perspective of a company’s deviation from the industry’s conventional strategy, and selects China’s A stock market company as an initial research sample for empirical analysis from 2000 to 2016. Research shows that the greater the company’s strategic differences, the lower the accounting conservatism. Further studies have found that the negative correlation between corporate strategic differences and accounting conservatism is even more pronounced in private enterprises. In addition, from the perspective of the intensity of industry rules, this paper compares the degree of strategic deviance between state-owned enterprises and private enterprises, the results show that state-owned enterprises are subject to stronger constraints and the degree of strategic differences will be lower. This article focuses on the perspective of corporate strategic deviance and examines the role of non-accounting information in corporate accounting practices, and compares the strategic differences between state-owned enterprises and private enterprises from the perspective of the strength of industry constraints, which provides an effective means for the company’s external stakeholders, including creditors and investors, to use the company’s strategic information, and enriches the research on the reform of China’s property rights system.
Factors Influencing the Level of Accounting Conservatism in the Financial Statements  [cached]
Allam Mohammed Hamdan,Mohammed Hasan Abzakh,Mahmud Hosni Al-Ataibi
International Business Research , 2011, DOI: 10.5539/ibr.v4n3p145
Abstract: This study aims to evaluate the role of the public sector in regulating Accounting Standards in Kuwait through examining its ability to oblige those companies listed in Kuwait Stock Exchange (KSE) to present a reasonable level of accounting conservatism when preparing financial statements. In addition, the study examines the factors that affect the level of accounting conservatism in those companies with regard to company size, debt contracts, and the type of sector the company belongs to. To achieve these goals, two different methods were used to measure conservatism level and the factors influencing it. The methods are: Basu (1997) model and Book-to-Market approach. The sample of the study comprises of (225) companies listed in (KSE). Findings of the study showed that the public sector of regulating accounting standards succeeded in forcing Kuwait companies to present a reasonable level of accounting conservatism. The study also found out that the financial statements of small companies were conservative, while those of the big ones were not. In addition, the debt contracts left an impact upon financial reports of accounting conservatism. Thus, companies with lower debts were more conservative than those of higher ones. Moreover, the financial statements of the financial sector in Kuwait Stock Exchange were the most conservative. The findings of the study showed how significant the accounting information in Kuwait was.
Accounting Conservatism: Evidence from Indian Markets  [PDF]
Sushma Vishnani, Dheeraj Misra
Theoretical Economics Letters (TEL) , 2016, DOI: 10.4236/tel.2016.65100
Abstract: This paper establishes existence of conditional conservatism in accounting practices of Indian corporate. It estimates firm-year measure of accounting conservatism (C-score). This study validates the C-score, asymmetric timeliness measure, and establishes monotonicity of C-scores. The paper also focuses on the study of the empirical properties of C-score and finds positive association of C-score decile ranks with decile wise Leverage and Variability. The C-score decile ranking is negatively associated with Size, Age, Market-to-Book Value ratio, Return on Assets and Non-Operating Accruals. Through this study, the forecasting capability of C-scores is established. C-scores can predict conditional conservatism up to two years ahead. This study is expected to play an important role in furtherance of research in this area in the Indian context.
Ownership Structure and Accounting Conservatism: A Literature Review  [PDF]
Fangfang Song
Modern Economy (ME) , 2015, DOI: 10.4236/me.2015.64046
Abstract: With the rapid development of modern corporate theory, the divergence of interests of shareholders and management began to increase, leading to more and more conflicts between the shareholders and managers. The agency problem hindered the company and shareholders to maximize their value. A reasonable ownership structure and sound accounting information can alleviate the problems caused by the agency conflict. Therefore, many scholars began to research the relationship between ownership structure and accounting conservatism. This article summarizes the relevant literature mainly from the ownership concentration, the degree of equity checks and balances, institutional ownership and state ownership of these four aspects, in order to provide theoretical support for the follow-up study.
Psychophysiological Correlates of the Disposition Effect  [PDF]
Marco Goulart, Newton Da Costa, Andre Santos, Emilio Takase, Sergio Da Silva
PLOS ONE , 2013, DOI: 10.1371/journal.pone.0054542
Abstract: We assess the psychophysiological characteristics underlying the disposition effect and find that subjects showing greater disposition effect are those who sweat more and present lower body temperature and heart rate.
The Investigation of the Impact of Auditor tenure and Audit Firm Size on Accounting Conservatism in Financial Reporting of Firms Listed in Tehran Stock Exchange (TSE)
International Journal of Finance and Accounting , 2012, DOI: 10.5923/j.ijfa.20120103.03
Abstract: Although audit quality and accounting conservatism are separate issue in financial reporting and accounting and audit scope, each has an important impact on capital market efficiency. However, this study tries to answer as to whether audit quality, characterized by audit firm size and auditor tenure, of firms listed in TSE could have a significant effect on accounting conservatism in financial reporting quality. To find an appropriate answer, after hypotheses development and collecting data for the period of 2002 to 2010, the hypotheses are tested. The results of hypotheses test show that audit quality including audit firm`s size and auditor tenure does not affect conservatism in financial reporting of firms listed in (TSE). This result may stem from the fact that managers have no conservative behavior in financial reporting so audit quality may not be an effective factor on manager’s conservative behavior in financial reporting.
Factors Affecting the Disposition Effect in Tehran Stock Market  [cached]
Reza Tehrani,Niloofar Gharehkoolchian
International Business Research , 2012, DOI: 10.5539/ibr.v5n3p40
Abstract: Given the significance and perceived inevitability of disposition effect and its impact on investment decisions, we investigate factors affecting the disposition effect in the Tehran Stock Exchange. Four hypotheses were developed and the data used in the study were collected through availability sampling. One-sample t-test, two-sample t-test and one-way ANOVA were run to analyze the data while Pearson correlation test and multiple regressions were used to assess relationships among variables in question. The results of the analyses indicate that overconfidence and mental accounting were not significantly correlated with disposition effect. Regret aversion had a positive relationship with disposition effect while self control was negatively associated. It was also observed that there was a negative relationship between participants’ level of education and their disposition effect indicating that the higher the level of education, the less the rate of disposition effect. Furthermore, the results of the study show that males enjoy a higher level of overconfidence than females, and 20 to 30 year-old age groups displayed much overconfidence than other age groups.
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