We review and analyze the accounting literature that examines the effects of accounting conservatism on financial statements and financial statement users. We begin by analyzing how conservatism affects the reported numbers on the financial statements. These studies primarily evaluate how conservatism affects earnings quality, including earnings persistence and the presence of earnings management. Next, we assess the effect of accounting conservatism on the users of the financial statements. We identify three primary users of the financial statements: (1) equity market users (2) debt market users and (3) corporate governance users. Within each of these categories, we analyze the findings of prior research and explore unanswered research questions. By analyzing the effects of accounting conservatism from a diverse range of research topics, we inform the discussion on the costs and benefits of accounting conservatism.
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28 February 2015
Research Article|
February 27 2015
Accounting conservatism: A review of the literature Available to Purchase
George W. Ruch;
George W. Ruch
University of Alabama
, Culverhouse School of Accountancy
, United States
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Gary Taylor
Gary Taylor
*
University of Alabama
, Culverhouse School of Accountancy
, United States
* Corresponding author. Tel.: +1 2053484658. E-mail addresses: ruch001@cba.ua.edu (G.W. Ruch), gtaylor@cba.ua.edu (G. Taylor).
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* Corresponding author. Tel.: +1 2053484658. E-mail addresses: ruch001@cba.ua.edu (G.W. Ruch), gtaylor@cba.ua.edu (G. Taylor).
Publisher: Emerald Publishing
Received:
May 21 2014
Revision Received:
May 21 2014
Accepted:
February 08 2015
Online ISSN: 2452-1469
Print ISSN: 0737-4607
Emerald Publishing Limited
2015
Journal of Accounting Literature (2015) 34 (1): 17–38.
Article history
Received:
May 21 2014
Revision Received:
May 21 2014
Accepted:
February 08 2015
Citation
Ruch GW, Taylor G (2015), "Accounting conservatism: A review of the literature". Journal of Accounting Literature, Vol. 34 No. 1 pp. 17–38, doi: https://doi.org/10.1016/j.acclit.2015.02.001
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