Examining the relationship between institutional investor inattention, accruals quality and conditional conservatism

Subject Areas :

Mohamad Mohamadi ¹ , Shohreh Khaleghi Mohamadi ²

1 - Department of Accounting, Non-profit University, Parandak, Iran
2 - Department of Accounting, Non-profit University, Parandak, Iran

Received: 2024-01-13 Accepted : 2024-05-10 Published : 2024-07-16

Keywords: Accruals quality, conditional conservatism, earning quality, institutional investor inattention.,

Abstract :

Purpose: The purpose of this research is to investigate the relationship between institutional investor inattention, accruals quality and conditional conservatism. Methodology: This research is applied and correlational. The data used are historical and ex-post and to test the research hypotheses, EViews 10 was used. The statistical population of this research is 438 companies from 2010 to 2019, which were listed during this period, and by applying the systematic elimination method, the number of the research population was reduced to 132 companies (1320 years - companies). Findings: The findings of the research show that there is a significant negative relationship between institutional investor inattention and conditional conservatism, and there is a significant positive relationship between institutional investor inattention and the low portion of accruals quality. In addition, the relationship between the institutional investor inattention and the low portion of accruals quality (discretionary accrual items) shows that in the case of institutional investor inattention, the amount of optional accrual items (abnormal accrual items) increases and as a result, the earning quality decreases. Originality: Institutional investor inattention and reducing their supervisory role, abnormal accruals (low portion of accruals quality) will increase and as a result, the earning quality will decrease. If institutional investors use their supervisory position well, they can prevent the presentation of manipulated earnings and dishonest expression.

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