This paper reports on the findings of a series of experiments which investigated the perceived message in four different audit reports. The study involved 252 participants, 125 in New Zealand and 127 in the United Kingdom. In a between-groups design, the participants were allocated to four...

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently published the final version of Chapter 1 of their joint Conceptual Framework for Financial Reporting (IASB/FASB, 2010). In this article, we focus on two of the key issues addressed in...

In this paper, we offer a new theory for the economic demand of accounting conservatism, which emphasizes the signaling role of conservatism in a debt market with asymmetric information. In our model, accounting conservatism serves as a signal by which the borrower firm can convey their private...

In this paper, we analytically and empirically examine the impact of default risk on the Basu (1997) measure of accounting conservatism. Using the classic Merton (1974) call-option model of equity, we show that the Basu asymmetric timeliness coefficient is biased upward by the existence of the...

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) recently published the final version of Chapter 1 of their joint Conceptual Framework for Financial Reporting (IASB/FASB, 2010). In this article, we focus on two of the key issues addressed in...