The relationship between financial statement comparability and accounting conditional and unconditional conservatism

Purpose - The primary objective of this study is to examine the correlation between financial statement comparability and conditional and unconditional conservatism within companies listed on the Tehran Stock Exchange (TSE). Design/methodology/approach - To achieve this, a sample of 193 companies, resulting in 1,546 firm-year observations, were listed on the TSE between 2014 and 2021. The study’s research hypotheses are assessed by applying multiple regression models. Findings - The findings reveal a notable positive association between financial statement comparability and conditional conservatism. Additionally, the research results indicate a significant and negative connection between financial statement comparability and unconditional conservatism. Practical implications - According to the findings, corporate managers may prioritize financial statement comparability to enhance conditional accounting conservatism, which might be translated as a suitable benchmark for competitors. Equity owners may decrease the agency problems associated with CEOs by emphasizing comparable financial reports, as it improves the quality of financial figures and facilitates stakeholders’ evaluation and comparison of various companies’ performances. Originality/value - A review of the relevant literature underscores the absence of research focusing on the relationship between financial statement comparability and conditional and unconditional conservatism within emerging markets. Consequently, this study aims to address this gap by investigating this relationship in the context of emerging markets and contributing to the existing body of literature in this field.