M.A. Thesis:

Conditional conservatism and relevance of financial reporting

The relevance of stock prices is one of the variables that influence the behavior of the capital market, the higher the relevance of stock prices, the higher the transparency of the information provided. The study examines the relationship between conditional conservatism and the relevance of financial reporting. For conditional conservatism measurements of the Basu model (1997), the Francis-Schipper (1999) and Lev and Zarovin (1999) models were used to measure the stock price relevance. The statistical population of this study was all firms listed in Tehran Stock Exchange during the period 2012 to 2016 and the sample was 148 companies. Data analysis was performed using panel data technique with the help of Eviews10 and Satat14 econometric software. The results showed that there is a significant correlation between the level conditional conservatism and the relevance of the price of the stock. The results of this research indicate that if conservatism increases during the research period, it increases the relevancy of accounting records. This can be due to various reasons such as the lack of efficiency of the Iranian capital market and fluctuations in economic news, the opportunistic behavior of profit management, and the greater emphasis of auditors on compliance with accounting standards, thus increasing the reliability of accounting information. As a result, the relevance of the information increases, as the findings This issue may be confirmed by the use of Iranian accounting standards that are internationally accepted and formulated and accepted in most countries of the world.

Keywords: conditional conservatism, stock price relevance, Tehran Stock Exchange