The influence of conditional conservatism on ownership dispersion: An international analysis
Journal
Spanish Journal of Finance and Accounting
Subject
Accounting
Publishing details
Authors / Editors
Ginera B;Tahoun A;Walker M
Biographies
Publication Year
2013
Abstract
We study the influence of conditional accounting conservatism on domestic investor diversification decisions. We argue that a conservative accounting system that promotes the dissemination of bad news and which constrains managers from engaging in opportunistic activities reduces the need for investors to concentrate their ownership, and consequently helps investors to diversify their investments. Through a country-level analysis we show that increased domestic conditional conservatism and higher domestic diversification opportunities lead to higher levels of domestic ownership diversification. Our results are robust to alternative estimates of conditional conservatism, and indicate that conditionally conservative accounting systems improve risk sharing. These results suggest that the accounting system, and in particular accounting conservatism, is part of the institutional settings embedded in the infrastructures of capital markets.
Available on ECCH
No
