Corporate Governance and Conservatism

Dariush Foroghi (foroghi@ase.ui.ac.ir), Hadi Amiri (h.amiri@ase.ui.ac.ir) and Zahra Nokhbeh Fallah (zahra.nfallah@yahoo.com)
Additional contact information
Dariush Foroghi: University of Isfahan
Hadi Amiri: University of Isfahan
Zahra Nokhbeh Fallah: University of Isfahan

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2013, vol. 3, issue 4, 61-71

Abstract: The purpose of this research is investigating the effects of strong corporate governance mechanisms on financial reporting conservatism of companies listed in Tehran Stock Exchange. Khan and Watts (2009) and Givoly and Hayn (2000) models are used as measure of conservatism. Also simultaneously existence of three corporate governance mechanisms are used as determinant of strong corporate governance, these mechanisms are: institutional ownership, CEO/Chair duality and lower percentage of inside directors than the median firm in the sample. The results of investigating a sample of 720 firm-years during the years of 2002 to 2011 of companies listed in Tehran Stock Exchange shows positive and significant relation between corporate governance mechanisms and conservatism. These results confirm complementary approach about the relation between corporate governance mechanisms and conservatism, in other words, strong corporate governance mechanisms increase conservatism in financial reporting.

Keywords: Corporate Governance Mechanisms; Conditional Conservatism; Unconditional Conservatism (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:3:y:2013:i:4:p:61-71

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