M.A. Thesis:

corporate life cycle and conservatism of accoanting

The purpose of this study is to investigate the relationship between different stages of a company's life cycle and accounting conservatism in the companies listed on the Tehran Stock Exchange (TSE). For this purpose, the data on growth, maturation, and decline stages of the companies were collected as a criterion for their' life cycle and accounting conservatism within a period of six years between 1389 and 1394. Then, they were analyzed using Eviews statistical software. The results at 95% confidence level showed a positive and significant relationship between the growth stage of the company's life cycle and accounting conservatism. This relation can be interpreted to mean that institutions and companies follow a specific policy according to each stage of their economic life cycle. Such policy is reflected in their accounting and financial reporting data and affects them. As companies in the growth stage have an increasing investment in assets and capital projects, the use of conservative procedures increases the hidden reserves, resulting in lower earnings in the early years of asset life and provide more profits and generate unusual profits in the coming years. Concerning the relationship between the stage of maturity of the company's life cycle and accounting conservatism, the results at 95% confidence level reflected the fact that there was no significant relationship between the maturity level of companies and conservatism. At the maturity stage, the amount of investment in assets and capital projects is relatively constant, therefore, regardless of the existence or absence of conservatism, the amount of hidden reserves is almost constant. However, the relationship between the decline phase of the company's life cycle and accounting conservatism at 95% confidence level indicates a significant and positive relationship between the phase of decline of the company's life cycle and accounting conservatism. This relationship can also be justified by a decline in the level of investment in assets and capital projects. On this stage, the use of conservative practices reduces hidden reserves, therefore provides more profit in the early years of asset life and providing less profit and reducing unusual profits in the coming years.

Keywords: : Growth Stage of ComCorporate growth stage, maturity stage, decline stage, accounting conservatism