Asymmetry of Information, Wealth Appropriation, Bank Loan Covenants and the Signaling Role of Accounting Conservatism

2011 ◽  
Author(s):  
Jeffrey L. Callen ◽  
Feng Chen ◽  
Yiwei Dou ◽  
Baohua Xin
Keyword(s):  
Accounting Conservatism ◽  
Bank Loan ◽  
Asymmetry Of Information ◽  
Loan Covenants

Accounting Conservatism and Firm Growth Financed by External Debt

2016 ◽  
Vol 32 (2) ◽  
pp. 182-208 ◽  
Author(s):  
Tony Kang ◽  
Gerald J. Lobo ◽  
Michael C. Wolfe
Keyword(s):  
Firm Growth ◽  
Positive Relationship ◽  
External Debt ◽  
Debt Maturity ◽  
Accounting Conservatism ◽  
Debt Contracting ◽  
Conservative Accounting ◽  
Agency Risk

Previous research shows that accounting conservatism facilitates debt contracting. Extending this line of literature, we examine whether the role of accounting conservatism in accessing external debt to attain firm growth varies with its maturity. We find evidence of a positive relationship between conservatism and debt maturity. We also observe a positive relationship between conservative accounting and future growth funded by all classes of debt, but this relation is due to long-term rather than short-term debt, which is less prone to agency risk. Furthermore, the associations between conservatism and debt maturity and conservatism and growth financed by long-term debt are mostly observed for firms with fewer anti-takeover provisions in place. These findings suggest that the demand for accounting conservatism is not uniform across different debt maturity horizons.

scholarly journals Telaah Literatur Tentang Faktor-Faktor yang Mempengaruhi Konservatisme Akuntansi

2012 ◽  
Vol 8 (2) ◽  
Author(s):  
Lia Alfiah Dinanar Hati
Keyword(s):  
Conflict Of Interest ◽  
Financial Distress ◽  
Accounting Conservatism ◽  
Litigation Risk ◽  
Political Costs

This paper examine several factor that impact to accounting conservatism practice. Conservatism is commonly defined as the differential verifiability required for recognition of profits versus losses. Regardless of the different opinion about role of accounting conservatism, in fact, this principle is still in uses until now and be one of the dominant principle in accounting. Through this article the author do review of several previous studies about accounting conservatism at Indonesia and other country. From several review we conclude that accounting conservatism is affected by factors of contracting, litigation risk, political costs, regulations, financial distress and conflict of interest between shareholders and bondholders.

scholarly journals The Role of Debt Covenant in Moderating the Effects of Poilitical Cost on Accounting Conservatism

2020 ◽  
Vol 5 (9) ◽  
pp. 505-510
Author(s):  
Nur Fatwa Basar ◽  
Andi Hendro
Keyword(s):  
Financial Services ◽  
Stock Exchange ◽  
Secondary Data ◽  
Accounting Conservatism ◽  
Debt Covenants ◽  
Financial Reports ◽  
Political Costs ◽  
Political Cost ◽  
Debt Covenant

The purpose of this study was to analyze the direct effect of political cost and debt covenant on accounting conservatism. Besides, this study also analyzes the role of debt covenants as a moderator between the effect of political cost on accounting conservatism. The companies that are the samples are companies indexed on the IDX30 other than financial services companies and companies with non-rupiah financial reports. the data used is secondary data from the financial statements of 20 companies listed on the Indonesian stock exchange. data analysis using multiple linear regression and analysis of variance. The results showed that political cost directly affects accounting conservatism positively and significantly. whereas debt covenant does not have a direct significant effect on accounting conservatism. Besides, this study shows the role of debt covenants in strengthening the effect of political costs on accounting conservatism.

scholarly journals Accounting Conservatism And Firms’ Investment Decisions

2016 ◽  
Vol 32 (4) ◽  
pp. 1223-1236 ◽  
Author(s):  
Jungeun Cho ◽  
Won-Wook Choi
Keyword(s):  
Investment Decisions ◽  
Financial Statements ◽  
Accounting Conservatism ◽  
Financial Disclosure ◽  
Managerial Ownership ◽  
Conservative Accounting ◽  
Controlling Mechanism ◽  
The Impact ◽  
Timely Loss Recognition

This study examines the effectiveness of accounting conservatism in monitoring and controlling managers’ decision-making regarding opportunistic investment. We find that accounting conservatism is negatively associated with over-investment. This suggests that conservative accounting policies serve as an efficient monitoring and controlling mechanism for opportunistic investment decisions. We also find a stronger negative association between accounting conservatism and over-investment in firms with low managerial ownership and low ownership by foreign investors. The results of our analysis imply that the impact of timely loss recognition on over-investment is more significant in firms with high agency problems and weaker monitoring ability, and that this factor complements other governance mechanisms, thereby helping to control managers’ myopic investment decisions. We provide evidence for a role of financial disclosure in mitigating managers’ opportunistic over-investment decisions. Though managers’ over-investment decisions are motivated by private gain, which reduces firm performance and compromises investors’ welfare, limited research exists on the role of financial information in alleviating such behavior. We suggest that timely loss recognition in financial statements can serve as an effective monitoring mechanism to aid in control of managers’ myopic over-investment.

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