The Relationship of Conditional and Unconditional Conservatism with Earning Anticipation amount

Subject Areas :

Mohammad Hossein Setayesh ¹ , Hamid Reza Rezaei ²

1 - استادیار دانشگاه شیراز
2 - دانشجوی کارشناسی ارشد حسابداری دانشگاه شیراز

Received: 2015-05-09 Accepted : 2015-05-09 Published : 2012-08-22

Keywords: Conditional Conservatism, Unconditional Conservatism, Earning AnticipatioN,

Abstract :

The main purpose of this paper is review of the relationship between conservatism and amount of earning anticipation of companies accepted in Tehran stock exchange. For quantifying the conditional conservatism, we use two measures including negative coefficient of total voluntary(non-operational) accrual items to total assets and the proportion of net income before unexpected items to market value of stockholders equity. Likewise, for quantifying the unconditional conservatism, we use two measures namely the rate of book value to market value of net assets and negative coefficient of total accrual items total assets average. Research hypothesis studied on each industries level and total industry level. The findings imply that there was no significant relationship between including negative coefficient of total voluntary(non-operational) accrual items and anticipated earning in total industry level.Also, there was a significant relationship between the proportion of net income before unexpected items to market value of stockholders equity and anticipated earning in plant and equipment, electric and ceramic tile industries; but there was not a significant relationship between them in total industry level. In addition, there was an insignificant relationship betweenthe proportionof book value to market value of net assets andanticipated earning in electric and food-beverage industries and this hypothesis corroborated in other industries and total industry level. Eventually, the results represent that the negative coefficient of total accrual items to total assets average had an insignificant relationship on anticipated earning.

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