Conservatism and Debt
Despite the unquestionable influence of conservatism, disagreement remains about what economic demands lead to financial reporting conservatism. Research examining lenders' demands for reporting conservatism has been questioned for ignoring conservative contract modifications. We document that these modifications exist but are not ubiquitous. We find contract modifications are more likely when agency costs are higher and litigation, tax and equity demands for conservatism are lower. However, we find a positive association between unexplained reporting conservatism and contract modifications, suggesting contractual modifications alone do not fulfill lenders' demands for conservatism.
|Year of publication:||
|Authors:||Beatty, Anne ; Weber, Joseph ; Yu, Jeff Jiewei|
Journal of Accounting and Economics. - Elsevier, ISSN 0165-4101. - Vol. 45.2008, 2-3, p. 154-174
|Type of publication:||Article|
Persistent link: https://www.econbiz.de/10005492495