The Effect of Accounting Conservatism On Reducing Stock Price Crash Risk

Subject Areas : Management Accounting

جواد مرادی ¹ , هاشم ولی پور ² , مرجان قلمی ³

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Received: 2011-10-04 Accepted : 2012-01-23 Published : 2011-12-22

Keywords: Conservatism, information asymmetry, Stock price crash, Price&#x0D, &#x0D, Difference Domain, Market to Book Ratio,

Abstract :

The purpose of this research is to examine the effect of accounting conservatism onreducing stock price crash risk in Tehran Stock Exchange (TSE). The time period ofthis research is from 1380 through 1387 and the sample consists of 90 companieswhich listed in TSE over this time period. The findings show that there is a reserverelation between existence of stock price crash event and accounting conservatismover the research period. In other words, the findings suggest that accountingconservatism has a positive effect on reducing stock price crash. The results suggestthe relation between conservatism and stock price crash event in companies with highinformation asymmetry isn’t significant, too. These empirical evidences show thatinformation asymmetry isn’t able to increase the effect of conservatism in reducingstock price crash.