Accounting Conservatism and Creditor Recovery Rate

2015 ◽  
Vol 90 (6) ◽  
pp. 2267-2303 ◽  
Author(s):  
John Donovan ◽  
Richard M. Frankel ◽  
Xiumin Martin
Keyword(s):  
Recovery Rate ◽  
Firm Value ◽  
Accounting Conservatism ◽  
Positive Relation ◽  
Recovery Rates ◽  
Conservative Accounting ◽  
Jel Classifications

ABSTRACT We examine the relation between accounting conservatism and creditor recovery rates for firms in default. We also test the link between conservatism and the length of bankruptcy resolutions. We find that creditors of firms with more conservative accounting before default have significantly higher recovery rates, and that this positive relation is more pronounced for default firms that violated covenants before the default. We also find that conservative firms have higher asset productivity, shorter bankruptcy resolution, and a significantly higher probability of emerging from bankruptcy. These results suggest that accounting conservatism preserves firm value, leading to higher creditor recovery upon borrower default. JEL Classifications: M4; G32; G33; G34.

scholarly journals The Benefits of Conservative Accounting to Shareholders: Evidence from the Financial Crisis

2013 ◽  
Vol 27 (2) ◽  
pp. 319-346 ◽  
Author(s):  
Bill Francis ◽  
Iftekhar Hasan ◽  
Qiang Wu
Keyword(s):  
Financial Crisis ◽  
Firm Value ◽  
Governance Mechanism ◽  
Current Crisis ◽  
Stock Performance ◽  
Conservative Accounting ◽  
Alternative Measures ◽  
Recent Financial Crisis ◽  
And Control ◽  
Jel Classifications

SYNOPSIS Using the recent financial crisis as a natural quasi-experiment we test whether, and to what extent, conservative accounting affects shareholder value. We find that there is a significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it. JEL Classifications: M41; M48; G01.

scholarly journals The effect of gender diversity of board directors and accounting conservatism on firm value

2021 ◽  
Vol 27 (127) ◽  
pp. 285-306
Author(s):  
Muthana Rokan Jasim ◽  
Ashraf Hashim Faris ◽  
Ashraf Hashim Faris ◽  
Ayad Dakheel Saleem
Keyword(s):  
Firm Value ◽  
Positive Relationship ◽  
Gender Diversity ◽  
Accounting Conservatism ◽  
Main Hypothesis ◽  
Intermediate Variable ◽  
Conservative Accounting ◽  
Board Directors ◽  
Board Director ◽  
The Relationship

The study aims to investigate the relationship between the gender diversity of board director, the accounting conservatism and firm value in Iraqi firms. The sample was represented by 30 Iraqi firms listed on the Iraqi market over the period 2017. The research was based on the main hypothesis that gender diversity has a positive relationship with conservatism and firm value, that conservatism as an intermediate variable will enhance the positive relationship between gender diversity and firm value. The study reached results that support the research hypotheses. The appointment of females to the board helps improve the provision of conservative accounting information and avoids overstate when reporting earnings. Based on these results, Therefore, we recommend the Iraqi companies appoint between 15 to 30% of females on the board.  

Accounting Conservatism, Earnings Persistence, and Pricing Multiples on Earnings

2013 ◽  
Vol 28 (2) ◽  
pp. 233-260 ◽  
Author(s):  
Lucy Huajing Chen ◽  
David M. Folsom ◽  
Wonsun Paek ◽  
Heibatollah Sami
Keyword(s):  
Accounting Conservatism ◽  
Earnings Persistence ◽  
Conservative Accounting ◽  
Reported Earnings ◽  
Jel Classifications

SYNOPSIS We examine the effect of accounting conservatism on earnings persistence and the stock market's valuation of earnings. Using a sample of U.S. companies during the period of 1988–2010, we find that firms with more conservative accounting generate less persistent earnings than firms with less conservative accounting. We also document that the pricing multiple on more conservative earnings is smaller than pricing multiples on less conservative earnings. Finally, we show that conditionally conservative earnings are less persistent than unconditionally conservative earnings, and the pricing multiple on earnings is smaller for conditionally conservative earnings than for unconditionally conservative earnings. Our results improve our understanding of the characteristics of conservatively reported earnings. JEL Classifications: M41; C23; D21; G38; N20

Accounting Conservatism and Firm Growth Financed by External Debt

2016 ◽  
Vol 32 (2) ◽  
pp. 182-208 ◽  
Author(s):  
Tony Kang ◽  
Gerald J. Lobo ◽  
Michael C. Wolfe
Keyword(s):  
Firm Growth ◽  
Positive Relationship ◽  
External Debt ◽  
Debt Maturity ◽  
Accounting Conservatism ◽  
Debt Contracting ◽  
Conservative Accounting ◽  
Agency Risk

Previous research shows that accounting conservatism facilitates debt contracting. Extending this line of literature, we examine whether the role of accounting conservatism in accessing external debt to attain firm growth varies with its maturity. We find evidence of a positive relationship between conservatism and debt maturity. We also observe a positive relationship between conservative accounting and future growth funded by all classes of debt, but this relation is due to long-term rather than short-term debt, which is less prone to agency risk. Furthermore, the associations between conservatism and debt maturity and conservatism and growth financed by long-term debt are mostly observed for firms with fewer anti-takeover provisions in place. These findings suggest that the demand for accounting conservatism is not uniform across different debt maturity horizons.

Attempting to reconcile large differences in Improving Access to Psychological Therapies recovery rates

2018 ◽  
Vol 23 (9) ◽  
pp. 1153-1158
Author(s):  
Scott H Waltman
Keyword(s):  
Pilot Study ◽  
Recovery Rate ◽  
Convenience Sample ◽  
Public Funds ◽  
Recovery Rates ◽  
Psychological Therapies ◽  
Percent Recovery ◽  
Small N ◽  
High Degree ◽  
Limited Scope

The Improving Access to Psychological Therapies initiative has a reported 50 percent recovery rate. Recently, Scott published a scathing report asserting that 9.2 percent is the correct rate. This alarming assertion requires a closer look and further scrutiny of the Improving Access to Psychological Therapies. Scott’s study is fundamentally flawed in many ways; chiefly, the small ( n = 87), forensically involved, convenience sample is not representative of the Improving Access to Psychological Therapies population. Scott’s study is more a limited-scope non-representative-sampled audit (or pilot study audit) of the Improving Access to Psychological Therapies. Given the large amount of public funds involved in the project, further research and a high degree of transparency is warranted.

scholarly journals PENGARUH KONSERVATISME AKUNTANSI DAN PENGHINDARAN PAJAK TERHADAP NILAI PERUSAHAAN

2019 ◽  
Vol 2 (2) ◽  
pp. 134
Author(s):  
Puradinda Zulfiara ◽  
Juli Ismanto
Keyword(s):  
Firm Value ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Secondary Data ◽  
Accounting Conservatism ◽  
Annual Reports ◽  
Manufacturing Companies ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Positive Effect

Aim of this research is to determine the effect of accounting conservatism and tax avoidance on firm value. The type of data used in this study is secondary data in the form of annual reports of manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2013-2016 period. The number of samples is 48 manufacturing companies. The data analysis technique used is regression analysis. The results of the study show that conservatism has a positive effect on firm value, tax avoidance has a negative effect on firm value. While simultaneously conservatism and tax avoidance have a positive effect on firm value. Thus this study supports that accounting conservatism has a role as a function of monitoring the company's investment policies and one way to maintain the value of the company in limiting losses that may arise from poorly performing investment decisions. The company that conducts tax avoidance (has a smaller effective tax rate) is an effort made by management to reduce the company's tax burden and is able to minimize expenditure for tax purposes so that management looks good in the eyes of shareholders.

scholarly journals The Impact of Accounting Conservatism on Corporate Performance Indicators in Egypt

2019 ◽  
Vol 14 (10) ◽  
pp. 1
Author(s):  
Hanaa A. El-Habashy
Keyword(s):  
Performance Indicators ◽  
Corporate Performance ◽  
Positive Impact ◽  
Accounting Conservatism ◽  
Return On Assets ◽  
Return On Equity ◽  
Accounting Performance ◽  
Conservative Accounting ◽  
The Impact ◽  
Positive Effect

This study aims to investigate the impact of conservative accounting on corporate performance indicators of Egyptian firms. A sample of balanced data for the 40 most active non-financial companies was collected in the period 2009-2014 to test hypotheses. Panel regression models were used for data analysis. Givoly & Hayn (2000) indicator is used as a benchmark for measuring accounting conservatism. The corporate performance indicators used in this study are return-on-assets (ROA) and return on equity (ROE) representing accounting performance measures, as well as Tobin’s Q which measures market performance. The results of the research show that accounting conservatism has a significant positive impact on corporate performance indicators. This reflects the positive effect of corporate performance on shareholders that leads to a strong corporate financial position. To the best of our knowledge, no study has been conducted in Egypt as an emerging economy.

scholarly journals Accounting Conservatism And Firms’ Investment Decisions

2016 ◽  
Vol 32 (4) ◽  
pp. 1223-1236 ◽  
Author(s):  
Jungeun Cho ◽  
Won-Wook Choi
Keyword(s):  
Investment Decisions ◽  
Financial Statements ◽  
Accounting Conservatism ◽  
Financial Disclosure ◽  
Managerial Ownership ◽  
Conservative Accounting ◽  
Controlling Mechanism ◽  
The Impact ◽  
Timely Loss Recognition

This study examines the effectiveness of accounting conservatism in monitoring and controlling managers’ decision-making regarding opportunistic investment. We find that accounting conservatism is negatively associated with over-investment. This suggests that conservative accounting policies serve as an efficient monitoring and controlling mechanism for opportunistic investment decisions. We also find a stronger negative association between accounting conservatism and over-investment in firms with low managerial ownership and low ownership by foreign investors. The results of our analysis imply that the impact of timely loss recognition on over-investment is more significant in firms with high agency problems and weaker monitoring ability, and that this factor complements other governance mechanisms, thereby helping to control managers’ myopic investment decisions. We provide evidence for a role of financial disclosure in mitigating managers’ opportunistic over-investment decisions. Though managers’ over-investment decisions are motivated by private gain, which reduces firm performance and compromises investors’ welfare, limited research exists on the role of financial information in alleviating such behavior. We suggest that timely loss recognition in financial statements can serve as an effective monitoring mechanism to aid in control of managers’ myopic over-investment.

scholarly journals UNCONDITIONAL CONSERVATISM AS A MEDIATION BETWEEN LEVERAGE AND SIZE TO FIRM VALUE

2019 ◽  
Vol 2 (2) ◽  
pp. 69-74
Author(s):  
DINUL ALFIAN AKBAR ◽  
AMRI AMIR ◽  
SRI RAHAYU ◽  
ASEP MACHPUDIN
Keyword(s):  
Direct Effect ◽  
Firm Value ◽  
Stock Exchange ◽  
Direct Influence ◽  
Indirect Influence ◽  
Conservative Accounting ◽  
Accounting Numbers

This research is motivated by the controversy regarding the benefits of conservative accounting numbers, intended to determine the direct effect of leverage and size on firm value, and the indirect influence of these variables through unconditional conservatism as an intervening variable on firm values ​​in 2010 - 2017 on the Stock Exchange Indonesia. The results were that the variable unconditional conservatism can mediate the influence between size on firm value. There is a direct influence between leverage and size on firm value.

scholarly journals 171IMPROVEMENT IN EMBRYO RECOVERY USING UTERINE DOUBLE FLUSHING

2004 ◽  
Vol 16 (2) ◽  
pp. 207 ◽  
Author(s):  
A. Castro Neto ◽  
B.V. Sanches ◽  
S.H.V. Perri ◽  
M.M. Seneda ◽  
J.F. Garcia
Keyword(s):  
Recovery Rate ◽  
Foley Catheter ◽  
Test Group ◽  
Control Group ◽  
Recovery Rates ◽  
Mean Values ◽  
Embryo Recovery ◽  
Group A ◽  
Uterine Flushing ◽  
The Mean

The aim of the present study was to evaluate the effects of uterine double flushing on embryo recovery rates (total structures and viable embryos), after a resting period with the uterus filled with PBS. There were 210 embryo recovery procedures conducted using the uterine double flushing method, and the results were compaired with 432 conventional single flushing procedures. All procedures were conducted with Limousin (n=403) and Guzerá (n=239) cows, following the same superovulation protocol. Cyclic donors received a progestagen implant (CIDR) and 1mL of oestradiol benzoate (Estrogin®) at Day 0. Between Day 5 and Day 9 animals received doses ranging from 200 to 300UI (zebu cows) and 300 to 500UI (taurine cows) of FSH (Pluset® – Serono) in decreasing doses. Between Day 6 and Day 8 PGF2a (Ciosin®) was administered, followed by withdrawal of the progestagen after 24h. Artificial insemination was performed between 14 and 26h after the beginning of treatment. For the double flushing procedure, after the first uterine flushing of both horns with 1L DPBS (Nutricell), a Foley catheter was positioned in the uterine body in order to fill the uterus with the same solution (80 to 150mL). After this procedure the catheter was closed with a disposable 5-mL syringe gasket, and the animals were allowed to rest in the surroundings of the work place for 30min. After this period, a second flush was performed in order to recover the remaning liquid used during manipulation of the uterus. Animals from the control group (group A) were subjected to a single uterine flushing procedure. From 210 double flushing procedures (group B – test), 1409 viable embryos were produced, classified as grades I, II, III and IV (IETS), (average of 6.7 embryos per procedure), whereas, in the 432 single flushing procedure (group A – control), 1993 embryos were produced (average of 4.6). Statistical analysis showed the increase of viable embryo recovery rate. When consecutive double flushing was performed, the average of recovered embryos increased from 8.3 to 12.7 (P<0.05) in Limousin cows, and from 7.9 to 11.5 (P<0.05) in Guzerá cows. Comparing recovery after single flushing with that after double flushing, the mean number of viable embryos increased from 4.7 to 6.9 (P<0.05) in Limousin cows and from 4.5 to 6.4 (P<0.05) in Guzerá cows. In order to assure the nonexistence of negligence effects or operator influence on results, the mean values of total embryo recovery rate after single flushing (control group) was compared to the mean values of the same rate after the first uterine flushing on test group. Results indicated no difference between recovery rates. The present work showed the viability of using the uterine double flushing procedure for improvement of embryo recovery rates in cattle.

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