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The Impact of Accounting Conservatism on Financial Performance in Services Companies Listed on Amman Stock Exchange

Author

Listed:
  • Fuad Suleiman Al-Fasfus
  • Abdulwahhab Mahmoud Al-Rawashdeh
  • Ziyad Abdulhaleem Al-Theebeh
  • Hasan Abdulnasser Mohamad Al-Enabi

Abstract

This study aimed to identifying the impact of accounting conservatism on financial performance in services companies listed on Amman Stock Exchange, where the accounting conservatism was measured through the model of (Gvoly & Hyans, 2000), an approach that based on accruals, while the financial performance was measured through the return on equity (ROE), and earnings per share (EPS). And in order to achieve the objectives of the study, the descriptive and analytical approach was adopted, where the study was conducted on a sample of (23) service companies listed on Amman Stock Exchange during the period from 2015 to 2019. Also, in respect of analyzing the study data and test its hypotheses, the statistical analysis program (SPSS) was utilized, and simple regression equation was relied on in testing the hypotheses. Whereas, the major findings of the study are as follows: There is no statistically significant impact of the accounting conservatism on the financial performance with its indicators (rate of return on equity, and profit per share) in the services companies listed on Amman Stock Exchange. Meanwhile, the study recommended the necessity of urging the researched and listed services companies’ management on Amman Stock Exchange (especially those characterized by low accounting conservatism) to apply the principles and standards of accounting conservatism, due to the importance of these procedures on the quality of the financial reports and consequently the profits therein.

Suggested Citation

  • Fuad Suleiman Al-Fasfus & Abdulwahhab Mahmoud Al-Rawashdeh & Ziyad Abdulhaleem Al-Theebeh & Hasan Abdulnasser Mohamad Al-Enabi, 2022. "The Impact of Accounting Conservatism on Financial Performance in Services Companies Listed on Amman Stock Exchange," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 11, July.
    • Handle: RePEc:bjz:ajisjr:2277
    DOI: https://doi.org/10.36941/ajis-2022-0116
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    References listed on IDEAS

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    1. Yousef Shahwan & Mohydin Hamza & Faud Al-Fasfus & Nedal Al-Ramahi & Tareq Hammad Almubaydeen, 2022. "Social Responsibility Accounting, Disclosure and Real Practice: Evidence from Jordan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 12(3), pages 164-182.
    2. García Lara, Juan Manuel & García Osma, Beatriz & Penalva, Fernando, 2016. "Accounting conservatism and firm investment efficiency," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 221-238.
    3. Yousef Shahwan & Tareq Hammad Almubaydeen, 2020. "Effects of Board Size, Board Composition and Dividend Policy on Real Earnings Management in the Jordanian Listed Industrial Firms," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 195-202, July.
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