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The Benefits of Conservative Accounting to Shareholders
Bill B. FrancisIftekhar HasanQiang Wu
其他書名
Evidence from the Financial Crisis
出版Bank of Finland, 2013
ISBN95266990929789526699097
URLhttp://books.google.com.hk/books?id=73kNzwEACAAJ&hl=&source=gbs_api
註釋Using the recent financial crisis as a natural quasi-experiment, we test whether and to what extent conservative accounting affects shareholder value. We find that there is significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it.