Please use this identifier to cite or link to this item:
https://hdl.handle.net/2440/77803
Type: | Journal article |
Title: | Accounting conservatism and bankruptcy |
Author: | Lee, S.C. Chen, J.L. Jiang, I.M. Hsu, C.Y. |
Citation: | Journal of Accounting, Finance and Management Strategy, 2012; 7(2):41-54 |
Publisher: | Zhonghua Guanli Jixiao Pingjian Xuehui |
Issue Date: | 2012 |
ISSN: | 1556-5793 |
Statement of Responsibility: | Shih-Cheng Lee, Jiun-Lin Chen, I-Ming Jiang and Cheng-Yi Hsu |
Abstract: | This paper examines the relationship between accounting conservatism and bankruptcy. With 52,203 firm-year observations for 8,051 individual firms during 1986-2003, we show that accounting conservatism assists in predicting financial distress. All three different conservatism proxies (GAAP-mandated, accrual-based and market-bsed measures) provide significant and meaningful information for default forecasting. Firms with less conservatism are more likely to experience bankruptcy. Our findings support the economic role of conservatism and provide critical information regarding the debate whether conservatism should be eliminated in financial accounting. |
Keywords: | Accounting conservatism financial disterss bankruptcy probability |
Rights: | Copyright status unknown |
Appears in Collections: | Aurora harvest Business School publications |
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