Accounting conservatism forward-looking and defensive business strategies and environmental uncertainty with an emphasis on the asymmetric timeliness model

Document Type : Original Article

Authors
sedighe azizi 1
Suheela Askari Hassan Abadi 2
1 Assistant Professor of Accounting, Islamic Azad University, Baft Branch, Baft, Iran.
2 Assistant Professor of Accounting, Islamic Azad University, Darab Branch, Darab , Iran.
10.22034/jmaak.2024.77003.4200
Abstract
Decision analysis shows that decision rules that perform well under conditions of environmental uncertainty give more weight to negative outcomes than to positive outcomes. In other words, these rules show a conservative approach and tend to take potential risks seriously. Accounting conservatism makes bad news that is more important in the context of prudent decision rules more timely reflected, and this helps corporate managers and investors to better implement prudent decision rules. Therefore, the main goal of this research is to investigate Accounting conservatism forward-looking and defensive business strategies, and environmental uncertainty with an emphasis on the asymmetric timeliness model. For this purpose, a sample consisting of 1610 companies admitted to the Tehran Stock Exchange during the years 2009-2022 has been investigated using standard error clustering. In order to model environmental uncertainty at the company level, two different criteria have been used. The results of the research showed that forward-looking companies that face higher levels of environmental uncertainty have higher levels of accounting conservatism than defensive companies. Also, the results of the research showed that stagnant companies, which face higher levels of environmental uncertainty, have higher levels of accounting conservatism compared to alert companies.
Keywords
Accounting Conservatism
Business Strategies
Environmental Uncertainty
  • بهرادفر، علی. (۱۳۹۴). بررسی رابطه استراتژی های تجاری بر محافظه کاری و مدیریت سود در شرکت های پذیرفته شده در بورس اوراق بهادار تهران. کنفرانس بین المللی مدیریت و علوم انسانی. https://www.sid.ir/paper/825674/fa
  • تنانی، محسن؛ محب خواه، محمد. (1393). بررسی رابطه بین استراتژی کسب و کار با کیفیت سود و بازده سهام در شرکت‌های پذیرفته شده در بورس اوراق بهادار. پژوهش های تجربی حسابداری، 4(3)، 105-127.
  • حقیقت شهرستانی، مهدی؛ دستگیر، محسن؛ سروش یار، افسانه. (1401). تأثیر محافظه‌کاری شرطی و غیرشرطی بر سطح سرمایه‌گذاری آتی و ارزش سهام. پژوهش های حسابداری مالی و حسابرسی، 14(53)، 1-30.
  • حیدرپو، فرزانه؛ جهانشاد، آزیتا؛ مددی، نجمه. (1394). تأثیر محافظه‌کاری شرطی و محافظه‌کاری غیرشرطی بر ریسک‌پذیری مدیران. پایان‌نامه کارشناسی ارشد، دانشگاه آزاد اسلامی.
  • فروغی، داریوش؛ نخبه فلاح، زهرا. (1393). تاثیر اطمینان بیش از حد مدیریتی بر محافظه‌کاری شرطی و غیرشرطی. نشریه پژوهش های حسابداری مالی، 6(1)، 27-44.
  • معروفی، مریم. (۱۳۹۸). بررسی رابطه محافظه‌کاری حسابداری و ریسک ورشکستگی در بورس اوراق بهادار تهران،کنفرانس بین المللی مدیریت، حسابداری، اقتصاد و بانکداری در هزاره سوم، تهران، شرکت همایش آروین البرز،
  • ملک پور، فاطمه و سعید جبارزاده. (۱۳۹۸). بررسی تاثیر محافظه‌کاری حسابداری بر عدم‌تقارن اطلاعاتی در شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران،پنجمین کنفرانس بین المللی علوم مدیریت و حسابداری، تهران، موسسه آموزشی عالی مهر اروند و مرکز راهکارهای دستیابی به توسعه پایدار.
  • منصوری محمدآبادی، فاطمه؛ رضایی، مهدی. (۱۳۹۹). بررسی رابطه بین محافظه کاری حسابداری با استراتژی کسب و کار و ابهام در شرکت های پذیرفته شده در بورس اوراق بهادار تهران. پژوهشهای جدید در مدیریت و حسابداری، 37، 191-214.
  • مهربان پور، محمدرضا؛ فرزانه، مینا. (1395). محافظه‌کاری مشروط و غیرمشروط و ریسک قیمت سهام. دوماهنامه مدیریت، ۲۷(۱۸۷)، 59-43.

 

  • Ahmed, A. S., & Duellman, S. (2013). Managerial overconfidence and accounting conservatism. Journal of Accounting Research, 51(1), 1-30.
  • Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. Quarterly Journal of Economics, 131(4), 1593-1636.
  • Basu, S. (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1), 3-37.
  • Bentley, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2), 780-817.
  • Beaver, William H., & Stephen G. Ryan, (2000). Biases and Lags in Book Value and Their Effects on the Ability of the Book-to-Market Ratio to Predict Book Return on Equity. Journal of Accounting Research, 38(1), .127-148.
  • Bloom, N. (2009). The impact of uncertainty shocks. Econometrica, 77(3), 623–685.
  • Bloom, N., Bond, S., & Van Reenen, J. (2007). Uncertainty and investment dynamics. The Review of Economic Studies, 74(2), 391-415.
  • Bourgeois, L. J. (1985). Strategic goals, perceived uncertainty, and economic per- formance in volatile environments. Academy of Management Journal, 28(3), 548-573.
  • Boyd, B. K., & Fulk, J. (1996). Executive scanning and perceived uncertainty: A multidimensional model. Journal of Management, 22(1), 1-21.
  • Brynjolfsson, E., & Milgrom, P. (2013). Complementarity in organizations. In R. Gibbons, & J. Roberts (Eds.), The handbook of organizational economics (pp. 11-55). Princeton, NJ: Princeton University Press.
  • Daft, R. L., Sormunen, J., & Parks, D. (1988). Chief executive scanning, environmental characteristics, and company performance: An empirical study. Strategic Man- agement Journal, 9(2), 123–139.
  • Day, D. S., & Schoemaker, P. (2004). Peripheral vision: Sensing and acting on weak signals. Long Range Planning, 37, 117–121.
  • Downey, H. K., Hellriegel, D., & Slocum, J. W. (1975). Environmental uncertainty: The
  • Elenkov, D. S. (1997). Strategic uncertainty and environmental scanning: The case for institutional influences on scanning behavior. Strategic Management Journal, 18(4), 287–302.
  • Financial Accounting Standards Board. (2005). Board meeting handout: Conceptual framework. Norwalk, CT. Available at: www.fasb.org/06-22-05.pdf.
  • Financial Accounting Standards Board. (2008). Statement of financial accounting concepts No. 2, as amended. Norwalk, CT: FASB.
  • Frederickson, J. W., & Mitchell, T. R. (1984). Strategic decision process: Compre- hensiveness and performance in an industry with an unstable environment. Academy of Management Journal, 27(2), 399–423.
  • Givoly, D., & Hayn, C. (2000). The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative? Journal of Accounting and Economics, 29(3), 287–320.
  • Hambrick, D. C. (1982). Environmental scanning and organizational strategy. Strategic Management Journal, 3(2), 159-174.
  • Heinsalu, S. (2012). Equivalence of the information structure with unawareness to the logic of awareness. Journal of Economic Theory, 147(6), 2453-2468.
  • Hirschman, A. O. (1969). Exit, voice, and loyalty: Responses to decline in firms, orga- nizations, and states. Cambridge, MA: Harvard University Press.
  • Hsieh, C .C., Ma, Z., Novoselov, K. E. (2018). Accounting conservatism, business strategy, and ambiguity. Accounting, Organizations and Society, 74, 41-55.
  • Ishida, Souhei & Ito, K. (2014). The Effect of Accounting Conservatism on Corporate Investment Behavior, International Perspectives on Accounting and Corporate Behavior, 127, 59-80
  • Ittner, C. D., Larcker, D. F., & Rajan, M. V. (1997). The choice of performance measures in annual bonus contracts. The Accounting Review, 72(2), 231–255.
  • Julio, B., & Yook, Y. (2012). Political uncertainty and corporate investment cycles. The Journal of Finance, 67(1), 45-83.
  • Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: An Austrian approach. Journal of Economic Literature, 35(1), 60-85.
  • Knight, F. H. (1921). Risk, uncertainty and profit. New York, NY: Houghton Miffin.
  • Levinthal, D. A. (1997). Adaptation on rugged landscapes. Management Science, 43(7), 934-950.
  • Lorenzi, P., Sims, H. P., & Slocum, J. W. (1981). Perceived environmental uncertainty: An individual or environmental attribute? Journal of Management, 7(2), 27-41.
  • Maccheroni, F., Marinacci, M., & Ruffino, D. (2013). Alpha as ambiguity: Robust mean-variance portfolio analysis. Econometrica, 81(3), 1075-1113.
  • March, J. G. (1991). Exploration and exploitation in organizational learning. Orga- nization Science, 2(1), 71-87.
  • Miles, R. E., & Snow, C. C. (2003). Organizational strategy, structure, and process. Stanford, CA: Stanford University Press.
  • Miller, K. D. (1993). Industry and country effects on managers' perceptions of environmental uncertainties. Journal of International Business Studies, 24(4), 93-714.
  • Miller, D., & Friesen, P. H. (1982). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic Management Journal, 3(1), 1-25.
  • Nurul Houqe, M., Kerr, M., & Monem, M. (2017). Business Strategy andEarnings Quality. Electronic copy available at: http://ssrn. com/abstract=2198626 .
  • Simons, R. (1987). Accounting control systems and business strategy: An empirical analysis. Accounting, Organizations and Society, 12(4), 357–374.
  • Vander Bauwhede, H. (2007). The Impact of Conservatism on the Cost of Debt: Conditional Versus Unconditional Conservatism, Leuven: Katholieke Universiteit Leuven. working paper
  • Wald, A. (1945). Statistical decision functions which minimise the maximum risk. Annals of Mathematics, 46(2), 265–280.
  • Watts, R. L. (2003). Conservatism in accounting Part I: Explanations and implica- tions. Accounting Horizons, 17(3), 207–221.
  • Weick, K. E. (1979). The social psychology of organizing. Reading, MA: Addison- Wesley.
  • Williams, C. D. (2015). Asymmetric response to earnings news: A case for ambiguity. The Accounting Review, 9(2), 785-817.