Non-discretionary conservatism: Evidence and implications

Alastair Lawrence, Richard Sloan and Yuan Sun

Journal of Accounting and Economics, 2013, vol. 56, issue 2, 112-133

Abstract: A large body of accounting research finds that various contracting incentives lead managers to engage in conservative accounting practices. We extend existing research by modeling the impact of extant accounting rules on conservative accounting. Accounting rules typically require assets to be written down when their fair values drop sufficiently below their book values. We document evidence of the resulting non-discretionary conservatism and show that it appears to explain some of the results from previous research on contracting incentives.

Keywords: Non-discretionary conservatism; Conditional conservatism; Book-to-market; Asset impairment (search for similar items in EconPapers)
JEL-codes: C23 D21 G32 M41 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:56:y:2013:i:2:p:112-133

DOI: 10.1016/j.jacceco.2013.10.005

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