Investigating the effect of financing policies on conservatism

One of the concepts involved in financial reporting is conservatism that has a long history in accounting. Conservative accounting procedures prevents managers of opportunistic behavior and excessive optimism in the presentation of income. The aim of this study was to investigate the relationship between policy of financing in financial conservatism of companies listed in the Tehran Stock Exchange. In this study, a sample of listed companies in Tehran Stock Exchange during a ۵-year period of ۲۰۰۹ to ۲۰۱۳ were examined regarding their financial statements. Assumptions were analyzed using statistical methods, including tests for normality (Kolmogorov - Smirnov), autocorrelation test (Durbin-Watson), correlation (correlation coefficient, coefficient of determination), and multiple regression and test of coefficients in Spss software. The results showed that there was a significant relationship between financing methods and conservatism so that the company s size has a negative impact but financial leverage and market value of shareholders to equity to book value and the company s institutional ownership had a positive impact on conservatism.

Keywords:

Financial Reporting , Financing Practices , Short-term and Long-term Financing , Conservatism