Accounting Conservatism, Theory and Measurement Model

Accounting conservatism is a prudent reaction in dealing with inherent uncertainty in a company and is a valuation principle that influences accounting practices and financial reporting. This principle is needed to prevent companies from exaggerating earnings reporting. However, accounting conservatism is difficult to observe so a specific method is used as a measure. The book Accounting Conservatism, Theory and Measurement Model provides a discussion of the types of accounting conservatism and various measurement methods implemented for various companies. Specifically also discussed the difference between earnings management and accounting conservatism