Wang, T. C., Lin, H. W., Hsu, W. H., Chen, H. C., and Liu, C. W. 2017. Accounting Conservatism: A Review of the Research Based on Data from Asian Countries. NTU Management Review, 27 (4): 207-254. https://doi.org/10.6226/NTUMR.2017.DEC.25104-010
Tay-Chang Wang, Professor, Department of Accounting, National Taiwan University
Hsiou-Wei Lin, Professor, Department of International Business, National Taiwan University/ Professor, Department of International Business, Tunghai University
Wen-Hsin Hsu, Professor, Department of Accounting, National Taiwan University
Han-Chung Chen, Ph. D. Student, Department of Accounting, National Taiwan University
Chia-Wen Liu, Professor, Department of Accounting, National Taiwan University
Abstract
This paper reviews studies on the effects of accounting conservatism that used data from Taiwan and other Asian countries and were published between 2000 and 2015 in accounting journals listed in Rank “A” Journals of the Ministry of Science and Technology, the Taiwan Social Science Citation Index (TSSCI), and the Taiwan Accounting Review, as well as in other non-TSSCI journals. We attempt taxonomy of the extant literature on accounting conservatism and suggest six categories of research: the effects of conservatism on financial statement numbers, on equity markets, on debt markets, on corporate governance and compensation, and on regulation and litigation. We also discuss possible future research opportunities. In May of 2015, the International Accounting Standards Board (IASB) published for public comment an Exposure Draft proposing a revised Conceptual Framework for Financial Reporting which reintroduces the concept of “prudence” into the framework. This signifies the importance of research on accounting conservatism.
Keywords
accounting conservatismprudenceequity marketdebt market