M.A. Thesis:

Conditional conservatism, unconditional conservatism and trade credit

Trade credit is an important budget source for small and big businesses around the world. Various factors influence the amount of trade credit and among the most important of them is conservatism, which is one of the qualitative attributes of accounting information. This research, while studying the fundamental and scientific concepts, examines the relationship of conditional and unconditional accounting conservatism with trade credit. The research sample includes the data of 174 companies under Tehran stock exchange during the years 2010 to 2015, and the research hypothesis are tested on the data using multivariate linear regression analysis with panel data method with fixed effect, utilizing Eviews8 software. To calculate the trade credit, the ratio of accounts and notes payable and payment in advance from customers to the total assets is used, and to evaluate conditional and unconditional conservatism, Ball & Shivakumar(2005) model and Givoly & Hayn(2000) model are used respectively. The results of the data analysis and the hypothesis test indicates a direct and meaningful relationship between conditional and unconditional conservatism and trade credit. In other words, as the level of conditional and unconditional conservatism increases, trade credit will also increase and the businesses which incorporate more conservatism, can offer more trade credit.

Keywords: conditional conservatism, unconditional conservatism, trade credit