García Lara, Juan M.
[Verfasser:in]
;
Garcia Osma, Beatriz
[Sonstige Person, Familie und Körperschaft];
Penalva, Fernando
[Sonstige Person, Familie und Körperschaft]
Information Consequences of Accounting Conservatism
Anmerkungen:
In: European Accounting Review, Forthcoming
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 10, 2013 erstellt
Beschreibung:
We study the information consequences of conservatism in accounting. Prior research shows that information asymmetries in capital markets lead to firm-level increases in conservatism. In this paper, we further argue that increases in conservatism improve the firm information environment and lead to subsequent decreases in information asymmetries between firm insiders and outsiders. We predict and test if this decrease in information asymmetries manifests itself through: (a) a decrease in the bid-ask spread and in stock returns volatility, and (b) an improved information environment for financial analysts, leading to more precise and less dispersed forecasts, and to more analysts following the firm. Using a large US sample for the period 1977-2007 and several proxies for conservatism we find robust evidence consistent with our expectations. Our results are in line with conservatism being useful not only for debt-holders, but also for equity-holders