Accounting Conservatism and Corporate Governance's Mechanisms: Evidence from Tehran Stock Exchange

International Journal of Economics, Business and Finance, Vol. 1, No. 10, November 2013, PP: 301- 319

Posted: 1 Jan 2014 Last revised: 25 Feb 2017

See all articles by Akbar Javadian Kootanaee

Akbar Javadian Kootanaee

Islamic Azad University (IAU) - Faculty of Management & Accounting

Morteza Nedaei

University of Tehran

Date Written: December 1, 2013

Abstract

Accounting conservatism is one of the main characteristics of financial reporting, which has been incorporated in accounting theory and practice for a long time. Watts (2003) provides four explanations for the accounting conservatism; contracting, shareholder litigation, accounting regulation, and taxation. Conservatism can be a tool for efficient contracts and by limiting the field for opportunistic behavior of managers, cause be protect the interests of stakeholders and increase the company's value. The main objective of this study is investigating the relationship between corporate governance and conservatism in financial reporting of listed companies in Tehran Stock Exchange. In this study, to operationalize the conservatism coupled used Feltham and Ohlson (1995) and Givoly and Hayn (2000) model; and used by institutional ownership, board independence, board size, duality and membership of CEO on Board as proxy for corporate governance. To investigate this relationship used the multiple regression models. Findings of investigation of 146 companies (1259 firm-years) listed in Tehran Stock Exchange in the 2001 to 2012 by unbalanced Panel model representative, relation between conservatism and corporate governance was not significant. However, there was a significant positive relationship between profitability and conservatism.

Keywords: corporate governance, conservatism, corporate governance’s mechanisms

Suggested Citation

Javadian Kootanaee, Akbar and Nedaei, Morteza, Accounting Conservatism and Corporate Governance's Mechanisms: Evidence from Tehran Stock Exchange (December 1, 2013). International Journal of Economics, Business and Finance, Vol. 1, No. 10, November 2013, PP: 301- 319 , Available at SSRN: https://ssrn.com/abstract=2373379

Akbar Javadian Kootanaee (Contact Author)

Islamic Azad University (IAU) - Faculty of Management & Accounting ( email )

Tehran
Iran

Morteza Nedaei

University of Tehran ( email )

Amirabad e shomali, kuye daneshgah e Tehran
Tehran, UT Tehran 5433174616
Iran

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