Measuring Accounting Conservatism for Listed Companies in Amman Stock Exchange (ASE) During the Period 2001 – 2010

Abstract

Tareq Z. Mashoka*
Abstract
This paper aimed to measure accounting conservatism for listed
companies in the Amman stock Exchange (ASE) from the period 2001 to
2010. The sample of the study includes listed firms from three main sectors:
manufacturing, banking and service. The paper applied a model developed
by Basu (1997) to measure conservatism based on several events and
circumstances. Results show that listed companies report their financial
reports using a certain degree of conservatism. Results also show that
companies reporting a loss or reversing their losses use less conservative
practices in order to report profits. The paper also provides evidence that the
level of conservatism changes according to the companies’ industry
classification. Moreover, the results show that companies became less
conservative in their financial reporting after the financial crisis.
Key words: accounting conservatism, stock returns, financial reporting.