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Temporal variation and cross-sectional differences of accounting conservatism in emerging countries

Author

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  • Maha Khalifa
  • Hakim Ben Othman
  • Khaled Hussainey

Abstract

Prior research finds that accounting conservatism has increased over time in developed countries. In this paper, we examine the time-series extent and shift of accounting conservatism in emerging countries over the period 2000-2012. We also analyse differences in conservatism level across countries, regions, legal regimes and industries. In addition, we examine the impact of size, market-to-book and leverage on the degree of conservatism at firm level. We use a set of measures to assess the degree of conservatism. These include changing time-series properties of profitability, earnings, cash flows, accruals components, asymmetric timeliness, Market-to-Book ratio and Khan and Watts' (2009) C-score. We find that the degree of conservatism declined during the period between 2000 and 2007 and increased over the period 2007-2012. In addition, we find significant differences in accounting conservatism between common-law and code-law countries, across regions and industries.

Suggested Citation

  • Maha Khalifa & Hakim Ben Othman & Khaled Hussainey, 2016. "Temporal variation and cross-sectional differences of accounting conservatism in emerging countries," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 12(1), pages 45-69.
    • Handle: RePEc:ids:ijaape:v:12:y:2016:i:1:p:45-69
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    Cited by:

    1. Khalifa, Maha & Othman, Hakim Ben & Hussainey, Khaled, 2018. "The effect of ex ante and ex post conservatism on the cost of equity capital: A quantile regression approach for MENA countries," Research in International Business and Finance, Elsevier, vol. 44(C), pages 239-255.

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