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Accounting conservatism in a setting of Information Asymmetry between majority and minority shareholders

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  • Chi, Wuchun
  • Wang, Chenchin
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    Abstract

    Following LaFond and Watts (2008), we examine the relation between information asymmetry (as measured by PIN, probability of information-based trading) and accounting conservatism but focus on a country - Taiwan - whose institutional background is different from that of the United States. Due to the disparate degree of conservatism across the world, the conclusions of LaFond & Watts (2008) might not be universally applicable. Our findings support, in general, the applicability of their conclusion to a Taiwan data set. We find, however, that the effect of PIN appears weaker when auditor tenure is taken into account, thus supplementing their conclusions.

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    Bibliographic Info

    Article provided by Elsevier in its journal The International Journal of Accounting.

    Volume (Year): 45 (2010)
    Issue (Month): 4 (December)
    Pages: 465-489

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    Handle: RePEc:eee:accoun:v:45:y:2010:i:4:p:465-489

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    Web page: http://www.elsevier.com/locate/inca/620179

    Related research

    Keywords: Accounting conservatism Information asymmetry PIN (Probability of Information based on Trading);

    References

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