DOI
10.1002/jcaf.22602
Abstract
This study examines the relationship between accounting conservatism and measures of financial status. We find that, in general, a higher level of accounting conservatism is associated with a lower level of financial constraints – thereby making external funds less costly. The results also show that for a firm with a higher bid-ask spread or a higher likelihood of bankruptcy, this negative relationship between conservative financial reporting and financial constraints is intensified. In other words, a higher level of accounting conservatism is likely to make external funds less costly especially for those firms with a higher level of bid-ask spread or a higher level of bankruptcy risk.
Document Type
Article
Publication Date
11-17-2022
Publisher Statement
Copyright © 2022, Wiley.
DOI: https://doi.org/10.1002/jcaf.22602
The definitive version is available at: https://onlinelibrary.wiley.com/doi/10.1002/jcaf.22602
Recommended Citation
Kim, T., Lee, B. B., Meng, B., & Paik, D. G. (2023). The effect of accounting conservatism on measures of financial constraints. Journal of Corporate Accounting & Finance, 34, 166–186. https://doi.org/10.1002/jcaf.22602
