Temporal variation and cross-sectional differences of accounting conservatism in emerging countries

Prior research reported that accounting conservatism has increased over time in developed countries. In this paper, we try to examine the time-series extent and shift of accounting conservatism in emerging countries over the period 2000-2012. We also analyze differences in conservatism level across countries, regions, legal regimes and industries and the effect of size, Market-to-Book and leverage on the degree of conservatism. We use a set of measures to assess the degree of conservatism. These include changing time-series properties of profitability, earnings, cash flows, accruals components, asymmetric timeliness, Market-to-Book ratio. We find that the degree of conservatism is declined during the period between 2000 and 2007 and increased over the period 2007-2012. In addition, we observe significant differences in accounting conservatism between countries, across regions and industries.