<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Accounting conservatism is necessary for more reliability and verifiability in financial reports. Studies have reported mixed results concerning the comparative level of conservatism across countries, especially the celebrated comparison between the common law and code law countries. Therefore, this study is an attempt to reinvestigate accounting conservatism in French and UK companies, using 110 French companies and 105 UK companies during the period 2011-2019. Accounting conservatism was measured depending on the asymmetric accruals-to-cash flows because it does not rely on market information and its fluctuations. The results document a greater level of conservatism in UK companies compared to French companies, which confirms the findings of several previous studies concluding that companies in common law countries are more conservative than those from code law countries. The results of this study have many implications for different parties affecting the financial information environment, especially auditors who must continuously monitor conservatism practices in financial reports to maintain an adequate level.</p>
</abstract>

Accounting conservatism is necessary for more reliability and verifiability in financial reports. Studies have reported mixed results concerning the comparative level of conservatism across countries, especially the celebrated comparison between the common law and code law countries. Therefore, this study is an attempt to reinvestigate accounting conservatism in French and UK companies, using 110 French companies and 105 UK companies during the period 2011-2019. Accounting conservatism was measured depending on the asymmetric accruals-to-cash flows because it does not rely on market information and its fluctuations. The results document a greater level of conservatism in UK companies compared to French companies, which confirms the findings of several previous studies concluding that companies in common law countries are more conservative than those from code law countries. The results of this study have many implications for different parties affecting the financial information environment, especially auditors who must continuously monitor conservatism practices in financial reports to maintain an adequate level.

Measuring Accounting Conservatism in Financial Reports: A Comparison Between France and the United Kingdom

Département des Sciences Financières et Comptabilité

Journal of Social and Economic Statistics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Accounting conservatism is necessary for more reliability and verifiability in financial reports. Studies have reported mixed results concerning the...

Measuring Accounting Conservatism in Financial Reports: A Comparison Between France and the United Kingdom

Published Online: May 22, 2022

Page range: 56 - 75

DOI: https://doi.org/10.2478/jses-2021-0005

Keywords
Accounting conservatism, Accounting accruals, Cash flows from operations, Common law countries, Code law countries

© 2021 Bilal Kimouche, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Measuring Accounting Conservatism in Financial Reports: A Comparison Between France and the United Kingdom

Published Online: May 22, 2022

Page range: 56 - 75

DOI: https://doi.org/10.2478/jses-2021-0005

KeywordsAccounting conservatism, Accounting accruals, Cash flows from operations, Common law countries, Code law countries

© 2021 Bilal Kimouche, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
Accounting conservatism, Accounting accruals, Cash flows from operations, Common law countries, Code law countries