Relation between Accounting Conservatism and Financial Crises In Tehran Stock Exchange (TSE)

Subject Areas : Financial Knowledge of Securities Analysis

Received: 2011-03-09 Accepted : 2011-04-25 Published : 2011-03-21

Keywords: accounting conservatism, Financial crises, Firm Size, Leverage ratio, return on assets,

Abstract :

This research discusses about relation between accounting conservatism and financial crises in Tehran Stock Exchange (TSE) over 7- period in 48 firms with financial crises and 56 profitable firms. For research hypothesis tests, the data panel method from 105 firm (48 firms with financial crises and 56 profitable firms)   which belong to the span of years between 1380-1386 are used.Data analysis performed with logistic regression. The results of study showed that there is significant relationship between financial crises and accounting conservatism, company size, Leverage ratio and return on assets. Also the results of the study showed that there was not any significant relation between financial crises and sales growth. The outcome of the study also has showed that accounting conservatism is an effective mechanism for limiting bias behavior manager, and it can causes the company out of financial crisis in the long run.