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Measuring Accounting Conservatism in Financial Reports: A Comparison Between France and the United Kingdom

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  • Kimouche Bilal

    (Département des Sciences Financières et Comptabilité, Université 20 Août 1955, Skikda, Algeria)

Abstract

Accounting conservatism is necessary for more reliability and verifiability in financial reports. Studies have reported mixed results concerning the comparative level of conservatism across countries, especially the celebrated comparison between the common law and code law countries. Therefore, this study is an attempt to reinvestigate accounting conservatism in French and UK companies, using 110 French companies and 105 UK companies during the period 2011-2019. Accounting conservatism was measured depending on the asymmetric accruals-to-cash flows because it does not rely on market information and its fluctuations. The results document a greater level of conservatism in UK companies compared to French companies, which confirms the findings of several previous studies concluding that companies in common law countries are more conservative than those from code law countries. The results of this study have many implications for different parties affecting the financial information environment, especially auditors who must continuously monitor conservatism practices in financial reports to maintain an adequate level.

Suggested Citation

  • Kimouche Bilal, 2021. "Measuring Accounting Conservatism in Financial Reports: A Comparison Between France and the United Kingdom," Journal of Social and Economic Statistics, Sciendo, vol. 10(1-2), pages 56-75, December.
    • Handle: RePEc:vrs:jsesro:v:10:y:2021:i:1-2:p:56-75:n:6
    DOI: 10.2478/jses-2021-0005
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    References listed on IDEAS

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    More about this item

    Keywords

    Accounting conservatism; Accounting accruals; Cash flows from operations; Common law countries; Code law countries;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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