Abstract:
Conservatism is one of the qualitative characteristics of financial reporting. Also regarding
the fact that management uses a less conservative approach strategically, we will study the
effect of the size and the experience period of an auditing firm on the conditional and
unconditional conservatism in firms accepted in Tehran Stock Exchange. To calculate the
conditional and unconditional conservatism we have used models posed by Ball, Shiva
Komar, Guili, and Hyne. In this research 90 firms accepted in Tehran Stock Exchange were
investigated during the time period between the years 2007 and 2011. To test the hypotheses
we have used the linear regression model. The findings of the research show that the size of
an auditing firm does not have a meaningful effect on conditional and unconditional
conservatism, but the experience of an auditing firm affects conditional and unconditional
conservatism meaningfully and positively
Machine summary:
Also regarding the fact that management uses a less conservative approach strategically, we will study theeffect of the size and the experience period of an auditing firm on the conditional and unconditional conservatism in firms accepted in Tehran Stock Exchange.
Thus, the present research will investigate the effect of the size and experience duration of an auditing firm on conditional and unconditional conservatism.
The researches have shown that the size and the experiences of an auditing firm have a positive relationship with conditional and unconditional conservatism and the bigger auditing company and the more experienced one will use a more conservatism (Basoo & et al, 2001; Chang & et al, 2003).
Thus, regarding the great role of the big auditors in increasing conservatism approach in financial reporting, the following hypotheses are presented: First hypothesis: The size of auditing firm affects conditional conservatism.
Thus, regarding the role of experienced auditors in increasing more conservative approaches in financial reporting, the following hypotheses are suggested: Third hypothesis: The experience duration of an auditing firm affects conditional conservatism.
5. The models related to hypotheses' test In the present research and regarding the effect of size and the experience duration of the auditing firm on conditional and unconditional conservatism, the dependent research variable is conditional and unconditional conservatism.
Thus, regarding the coefficient of the independent variable we can claim that the experience duration of an auditing firm has a positive and meaningful effect on conditional and unconditional conservatism.