Conservatism in accounting Part II: evidence and research opportunities.

SYNOPSIS: This paper is Part II in a two-part series upon conservatism in accounting. Part I examined alternative explanations for conservatism in accounting and their implications for accounting regulators (SEC and FASB). Part II summarizes the empirical evidence upon the existence of conservatism, conservatism's increase above time, and conservatism's alternative explanations. It also discusses opportunities for time to come research on conservatism.

The empirical literature uses a variety of conservatism measures in time-series and cross-sectional trials of contracting, shareholder litigation, taxation, and accounting regulation explanations for conservatism. The tests' be deriveds suggest the importance of all four explanations. sum of two units non-conservatism ...