TY - JOUR
T1 - Conditional conservatism and value relevance of financial reporting: A study in view of converging accounting standards
AU - Thijssen, Maximiliaan Willem Pierre
AU - Iatridis, George Emmanuel
N1 - This publication of Max Thijssen is based on Bachelor IBA thesis project and the follow-up work done with one of our visiting professors.
PY - 2016
Y1 - 2016
N2 - This study examines the relationship between conditional conservatism and value relevance in the EU and US. Specifically, it investigates whether this relationship differs under US GAAP and IFRS compliance. In addition, this study examines the trend in value relevance, conditional conservatism and accrual conservatism. In total, 20.930 firm-year observations from 2009 to 2015 are extracted from the ORBIS database. Using pooled OLS regressions, this study concludes the following. First, a significant positive relationship between conservatism via accruals and value relevance. Second, a significant negative relationship between timelier recognition of losses and value relevance. Third, accounting standards do not provide significant explanatory power given different levels of conditional conservatism. Lastly, this study provides evidence that conditional conservatism is increasing and value relevance is decreasing.
AB - This study examines the relationship between conditional conservatism and value relevance in the EU and US. Specifically, it investigates whether this relationship differs under US GAAP and IFRS compliance. In addition, this study examines the trend in value relevance, conditional conservatism and accrual conservatism. In total, 20.930 firm-year observations from 2009 to 2015 are extracted from the ORBIS database. Using pooled OLS regressions, this study concludes the following. First, a significant positive relationship between conservatism via accruals and value relevance. Second, a significant negative relationship between timelier recognition of losses and value relevance. Third, accounting standards do not provide significant explanatory power given different levels of conditional conservatism. Lastly, this study provides evidence that conditional conservatism is increasing and value relevance is decreasing.
KW - IR-102554
KW - n/a OA procedure
U2 - 10.1016/j.mulfin.2016.10.001
DO - 10.1016/j.mulfin.2016.10.001
M3 - Article
VL - 37-38
SP - 48
EP - 70
JO - Journal of multinational financial management
JF - Journal of multinational financial management
SN - 1042-444X
ER -