American Journal of Economics, Finance and Management
Articles Information
American Journal of Economics, Finance and Management, Vol.2, No.3, Jun. 2016, Pub. Date: Jun. 17, 2016
Assessing the Effect of Conditional and Unconditional Conservatism on Financial Reporting Quality in Listed Companies on Tehran Stock Exchange
Pages: 22-27 Views: 1253 Downloads: 1187
Authors
[01] Mahdi Filsaraei, Department of Accounting, Bojnourd Branch, Islamic Azad University, Bojnourd, Iran.
[02] Masoud Movaghar Davoodlee, Department of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran.
[03] Ali Naghizadeh, Department of Accounting, Neyshabour Branch, Islamic Azad University, Neyshabour, Iran.
[04] Hoda Majbouri Yazdi, Non-Governmental Scientific Institute of Hakiman’s Private Higher Education, Bojnourd, Iran.
Abstract
Conservatism is an evaluation criterion of financial reporting quality. Requesting accounting information of higher quality can be influenced by the acceptance of securities in capital market. In this study, a major and two minor hypotheses are designed. All listed companies on Tehran Stock Exchange are considered as target population of the research which are examined over a ten-year period (2006-2015). Research sample is selected considering the following criteria: continuous activity of the firm during the research period, consistency of reporting timetables to omit seasonal effects, elimination of investment and financial intermediation institutions. The achieved findings indicate that at the significance level of %95 there is a significant relationship between conditional conservatism (derived from Givoly and Hayn’s (2000) model), unconditional conservatism (derived from Beaver and Ryan’s (2000) model) and reporting quality (following Barth et al. (2001) study).
Keywords
Conditional Conservatism, Unconditional Conservatism, Financial Reporting Quality, Capital Market, Consistency of Reporting
References
[01] Ahmed, A. S., & Duellman, S., (2007), "Accounting conservatism and board of director characteristics: An empirical analysis", Journal of Accounting and Economics, No.43, pp; 411-437.
[02] Ahmed, K., & Courtis, J. K., (1999). "Associations between corporate characteristics and disclosure levels in annual reports: A meta-analysis". British Accounting Review, Vo.31, pp: 35-61.
[03] Archambault, J. J., & Archambault, E. M., (2003). "A multinational test of determinants of corporate disclosure". The International Journal of Accounting, No. 38, pp: 173-194.
[04] Ashton, R. H., (1974). "The predictive-ability criterion and user prediction models". The Accounting Review, Vol.49, No. 4, pp: 719-732.
[05] Barth, M., Cram, D.P., & Nelson, K., (2001). “Accruals and the Prediction of Future Cash Flows”, The Accounting Review, Vol. 76, pp; 25-58.
[06] Basu, S., (1997), "The Conservatism Principle & the Asymmetric Timeliness Earnings", Journal of Accounting & Economics, Vol. 24, No. 1, pp: 3-37.
[07] Beaver, W., & Ryan, S., (2000), "Biases and Logs in Book Value and Their Effects on the Ability of the Book to Market Ratio to Predict Book Return on Equity", Journal of Accounting Research, Vol. 38, No. 1, pp: 127-148.
[08] Cohen, A. D., (2004), "Quality of Financial Reporting Choice: Determinants and Economic Consequences", A Dissertation, Northwestern University.
[09] Cooke, T. E., (1991). "An assessment of voluntary disclosure in the annual reports of Japanese corporations". The International Journal of Accounting, Vol.26, No.3, pp: 174-189.
[10] Dechow, P., & Dichev, I., (2002). "The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors", The Accounting Review, Vol. 77, pp: 35-59.
[11] Feltham, G., & Ohlson, J., (1995). "Valuation and clean surplus accounting for operating and financial activities", Contemporary Accounting Research, Vol. 11, No. 2, pp: 689-731.
[12] Francis, J., LaFond, R., Olsson, P., & Schipper, K., (2004). "Cost of Capital and Earnings Attributes". The Accounting Review, Vol. 79, pp: 967-1010.
[13] Givoly, D., & Hayn, C. K., (2000), "the Changing Time-series Properties of Earnings, Cash Flows and Accruals: Has Financial Reporting Become More Conservative?", Journal of Accounting and Economics, Vol. 29, Issue. 3, pp: 287–320.
[14] Graham, R. J., Harvey, C. R., & Rajgopal, S., (2005), “The Economic Implications of Corporate Financial Reporting”, Journal of Accounting & Economics, Vol. 40, pp: 3–73.
[15] Kordestani, Gh. R. & Rahimi, M. (2011) Assessing effective elements in financial reporting quality and its economic effects on capital market, Journal of Empirical Research in Accounting, issue 1.
[16] Lang, M., & Lundholm, R., (1993). "Cross-sectional determinants of analysts ratings of corporate disclosure". Journal of Accounting Research, Vol. 31, No. 2, pp: 246-271.
[17] Levitt, A., (1998). "The Importance of High-Quality Accounting Standards." Accounting Horizons, Vol. 12, pp: 79–82.
[18] Noravesh, I. (2008). Assessing the relationship between financial reporting quality and number of educated accountants in business units of listed companies on Tehran Stock Exchange, Accounting and Auditing Review, issues 24-25, pp. 34-48.
[19] Owusu-Ansah, S., (1998). "The impact of corporate attributes on the extent of mandatory disclosure and reporting by listed companies in Zimbabwe". The International Journal of Accounting, Vo. 33, No. 5, pp: 605-629.
[20] Poulaie Mooziraji, A & Darash, F., (2014). "An Empirical Study of Relationship between Conditional and Unconditional Conservatism on Cost of Equity Capital in Accepted Companies in the Tehran Stock Exchange International Journal of Management and Humanity Sciences. Vol., S (3), pp: 3906-3910.
[21] Ruch, G. W., & Taylor, G. K., (2011). "Accounting Conservatism and its Effects on Financial Reporting Quality: A Review of the Literature". Available at SSRN: http://ssrn.com/abstract=1931732
[22] Ryan, S., (2006), "Identifying conditional conservatism", European Accounting Review, Vol.15, No.4, pp: 511-525.
[23] Sajjadi, S. H. & Zaranezhad, M. & Jafari, A. R. (2009). Nonfinancial effective factors in financial reporting quality in listed companies on Tehran Stock Exchange, Accounting and Auditing Review, volume 16, issue 57, pp. 51-68.
[24] Singhvi, S., & Deasi, H. B., (1971). "An empirical analysis of the quality of corporate financial disclosure". The Accounting Review, Vol. 46, No. 1, pp: 621-632.
[25] Tai, B. Y. K., Au-Yenug, P. K., Kowk, M. C. M., & Lau, L. W. C., (1990). "Non-compliance with disclosure requirements in financial statements: The case of Hong Kong companies". The International Journal of Accounting, Vo. 25, No. 2, pp: 99-112.
[26] Wallace, R. S. O., Naser, K., (1995). "Firm-specific determinants of the comprehensiveness of mandatory disclosure in the annual corporate reports of firms listed on the Stock Exchange of Hong Kong". Journal of Accounting and Public Policy, Vol. 14, pp: 311-368.
[27] Yetman, M. H., & Yetman, R. J., (2004). "The Effects of Governance on the Financial Reporting Quality of Nonprofit Organizations". Working paper, University of California, Davis.
600 ATLANTIC AVE, BOSTON,
MA 02210, USA
+001-6179630233
AIS is an academia-oriented and non-commercial institute aiming at providing users with a way to quickly and easily get the academic and scientific information.
Copyright © 2014 - American Institute of Science except certain content provided by third parties.