Accounting conservatism in a setting of Information Asymmetry between majority and minority shareholders

Wuchun Chi and Chenchin Wang

The International Journal of Accounting, 2010, vol. 45, issue 4, 465-489

Abstract: Following LaFond and Watts (2008), we examine the relation between information asymmetry (as measured by PIN, probability of information-based trading) and accounting conservatism but focus on a country - Taiwan - whose institutional background is different from that of the United States. Due to the disparate degree of conservatism across the world, the conclusions of LaFond & Watts (2008) might not be universally applicable. Our findings support, in general, the applicability of their conclusion to a Taiwan data set. We find, however, that the effect of PIN appears weaker when auditor tenure is taken into account, thus supplementing their conclusions.

Keywords: Accounting; conservatism; Information; asymmetry; PIN; (Probability; of; Information; based; on; Trading) (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:45:y:2010:i:4:p:465-489

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