The Impact of Company Size, Debt Contracts, and Type of Sector on the Level of Accounting Conservatism: An Empirical Study from Bahrain
Year: 2011
Type: article
Abstract: The study's objective is to evaluate the role of the public sector in regulating accounting standards in BahrainStock Exchange (BSE) through examining its ability to oblige those companies listed on the (BSE) to present areasonable level of accounting conservatism when preparing financial reports. In addition, the study examinesthe factors that affect the level of accounting conservatism in those companies with regard to company size, debtcontracts, and the type of sector the company belongs to. To achieve these goals, two different methods wereused to measure conservatism level and the factors influencing it. The methods are: Basu (1997) model andBook-to-Market approach. The sample of the study comprises of (50) companies listed on the (BSE) during theperiod 2005-2008. Findings of the study showed that the public sector of regulating accounting standardssucceeded in forcing Bahrain companies to present a reasonable level of accounting conservatism. The study alsofound out that the financial reports of big companies were conservative, while those of the small ones were not.In addition, the debt contracts left an impact upon financial reports of accounting conservatism. Thus, companieswith higher debts were more conservative than those of lower ones. Moreover, the financial reports of the servicesector in Bahrain Stock Exchange were the most conservative. The findings of the study showed how significantthe accounting information in Bahrain was.
Author: Allam Mohammed Mousa Hamdan
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W2168449176