Uncertainty of uncertainty and accounting conservatism

Xin Cui, Tingting Ma, Xiaochen Xie and John W. Goodell

Finance Research Letters, 2023, vol. 52, issue C

Abstract: We investigate the impact of uncertainty of uncertainty (UOU) on corporate accounting conservatism, finding a positive association. Mechanism analysis suggests that under UOU, creditor demands for real information drives shifts toward accounting conservatism. Further analysis shows that the impact of UOU is more salient in non-SOEs, and firms with weak external monitoring mechanisms. Our study highlights that under uncertainty about levels of uncertainty, contract demand plays a significant role in corporate governance.

Keywords: Uncertainty of uncertainty; Accounting conservatism; Contract demand (search for similar items in EconPapers)
JEL-codes: E32 G34 M41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:52:y:2023:i:c:s1544612322007012

DOI: 10.1016/j.frl.2022.103525

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