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Product Market Competition and Accounting Conservatism: International evidence
Conference paper

Product Market Competition and Accounting Conservatism: International evidence

I.M. Haw, Y. Li and F.F. Zhang
American Accounting Association
American Accounting Association (AAA) 2012 Annual Conference. (Washington, DC, 04/08/2012–08/08/2012)
2012
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Abstract

This paper examines the role played by product market competition in shaping accounting conservatism in an international setting. Using a large dataset from 38 countries, we find that product market competition is positively associated with accounting conservatism and that the positive association is strengthened in countries with strong legal institutions. Our empirical findings suggest that product market competition and strong legal institutions jointly drive accounting conservatism. Our study highlights the importance of product market competition as an effective industry-level governance mechanism in determining the quality of accounting earnings.

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