Accounting Conservatism: An empirical study on financial reporting and stock returns in Norwegian listed firms

Abstract

This thesis studies conditional and unconditional accounting conservatism in Norwegian listed firms. We address two hypotheses; 1) a positive coefficient on change in cash investments captures conditional accounting conservatism, and 2) a positive coefficient on change in lagged operating assets captures unconditional accounting conservatism. This is studied over the ten-year period 2010-2019. We examine differences in conservatism across samples with different market to book ratios, industry classifications, non-negative and negative returns, as well as firms reporting losses or profits. Our findings indicate that conditional and unconditional accounting conservatism is not captured by a positive coefficient on change in cash investment and change in lagged operating assets, respectively. Keywords: accounting conservatism, returns, earnings