Abstract

http://ssrn.com/abstract=1621272
 
 

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Accounting Conservatism and Bankruptcy Risk


Gary C. Biddle


The University of Hong Kong

Mary L. Ma


York University

Frank M. Song


The University of Hong Kong - School of Economics and Finance

October 7, 2013


Abstract:     
This study presents evidence that unconditional and conditional conservatism help mitigate subsequent bankruptcy risk by enhancing cash, constraining earnings management, and lowering leverage. Our results are robust to income smoothing, extreme distress, reverse causality, relations between unconditional and conditional conservatism, and alternative measures of bankruptcy risk and conservatism. These findings extend research on accounting conservatism and bankruptcy risk, and help inform continuing debates regarding conservatism’s role as a pervasive property and longstanding tenet of financial accounting.

Keywords: accounting conservatism, bankruptcy risk, unconditional conservatism, conditional conservatism

JEL Classification: M41, G32, G33


Not Available For Download

Date posted: June 6, 2010 ; Last revised: January 13, 2015

Suggested Citation

Biddle, Gary C. and Ma, Mary L. and Song, Frank M., Accounting Conservatism and Bankruptcy Risk (October 7, 2013). Available at SSRN: http://ssrn.com/abstract=1621272 or http://dx.doi.org/10.2139/ssrn.1621272

Contact Information

Gary C. Biddle
The University of Hong Kong ( email )
1213 KK Leung Building
Pokfulam
Hong Kong
China
+852 3917-4388 (Phone)
+852 2858-5614 (Fax)
HOME PAGE: http://www.fbe.hku.hk/Aboutus/Staff_Detail.cfm?StaffID=315
Mary L. Ma (Contact Author)
York University ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
Frank M. Song
The University of Hong Kong - School of Economics and Finance ( email )
8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong
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