Discussion of 'Conditional and Unconditional Conservatism: Concepts and Modeling'
11 Pages Posted: 20 Apr 2014
Date Written: 2005
Beaver and Ryan (Beaver, W. H., Ryan S. G. (2005). Review of Accounting Studies 10: (2/3)) algebraically model, simulate and graph the effects of various factors on the nonlinear earnings-return relation induced by conditional conservatism. Their analysis clarifies how conditional and unconditional conservatism are inter-related. I discuss why unconditional and conditional conservatism are more than mere substitutes, and provide evidence from the historical record. I then highlight a few areas for future modeling, before moving on to discuss potential empirical tests of their predicted relations. I identify some research questions and opportunities for future investigation.
Keywords: write-down, impairment buffer, contracting efficiency, regulation
JEL Classification: C52, H26, K23, M41
Suggested Citation: Suggested Citation