The Effect of Product Market Competition on Conditional and Unconditional Conservative Accounting Procedures

Through a cross-sectional analysis, this paper explores the influence of Product Market Competition (PMC) structure on conditional and unconditional accounting conservatism. The study utilizes financial data from the Tehran Stock Exchange from ۲۰۱۲ to ۲۰۱۹. Conditional and unconditional conservatism are measured using Basu's (۱۹۹۷) and Beaver and Ryan's (۲۰۰۰) models, respectively. Additionally, the Herfindahl–Hirschman index (HHI) is employed to introduce exogenous variations in PMC, allowing an assessment of how increased competition in market valuation impacts accounting conservatism in manufacturing companies. Despite previous findings by Dhaliwal et al. (۲۰۱۴) suggesting a positive association between intense PMC and conditional conservatism, the results of this study demonstrate that PMC does not affect the implementation of conditional conservatism. Furthermore, this investigation reveals that PMC has no bearing on applying unconditional conservatism in financial reporting. This aligns with the theory of unconditional conservatism, indicating that companies employ it based on their financial policies. The outcomes of this research contribute to the existing literature on conservatism.

کلیدواژه ها:

Conditional conservatism ، PMC ، Political costs ، Unconditional conservatism