The effect of product market competition on conditional and unconditional conservative accounting procedures

Iranian Journal of Accounting, Auditing and Finance

مقالات آماده انتشار، پذیرفته شده، انتشار آنلاین از تاریخ 16 خرداد 1402   

نوع مقاله: Original Article

شناسه دیجیتال (DOI): 10.22067/ijaaf.2023.82636.1349

نویسنده

Mohammad Tavakoli^*

Department of Accounting

چکیده

This paper examines the impact of PMC's (Product Market Competition) structure on conditional and unconditional accounting conservatism based on cross-sectional analysis.

The financial data is applied from Tehran Stock Exchange during 2012-2019. Basu's (1997) and Beaver and Ryan's (2000) models measure conditional and unconditional conservatism. Also, the Herfindahl–Hirschman index (HHI) is employed as a source of exogenous variation in PMC to establish the impact of increasing market valuation competition on manufacturing companies' accounting conservatism.

Despite the findings of Dhaliwal et al. (2014) suggesting that intense PMC is positively associated with conditional conservatism, the results of the current paper evidence that PMC does not affect the level of conditional conservatism implementation. The investigation also documents that PMC has no impact on employing unconditional conservatism in financial reporting. This is consistent with the theory of unconditional conservatism which indicates that companies apply unconditional conservatism by considering their financial policies. The results of this research can add to the conservatism literature.

کلیدواژه‌ها

Conditional conservatism؛ PMC؛ Political costs؛ Unconditional conservatism