Study of Factors Affecting Conservatism in Iran Financial Reporting

Abstract

One important consequence of the conservatism asymmetric behavior is about the profits and losses and insistence on understatement net value of the assets. Legislators of capital markets, standards developers and academics, criticized conservatism for this reason: understatement in the current period may provide understatement cost of future periods and hence results overstatement earnings in future periods.

According to Beaver (1998), conservative behavior is in such a way that leads to chosen lower revenues (revenues greater than) and more cost (than lower costs) and detects imposed losses.

Conclusion: conservatism rather than a realistic assessment, thereby biasing the regular financial reports.  As a result, the Financial Accounting Standards Board points out, «conservatism contradicts with important qualitative features, such as an honest, impartial and comparability (including consistency of procedure). In this paper, we attempt to examine the various factors that effect conservatism in financial reporting in Iran and to achieve acceptable results in the context to which we have referred.