TITLE:
The Study of the Relationship of Conditional Conservatism for the Market-to-Book Ratio and Tobin’s Q
AUTHORS:
Abdolkarim Moghadam, Mehran Rahimi
KEYWORDS:
Market-to-Book Ratio, Tobin’s Q, Conditional Conservatism
JOURNAL NAME:
Open Journal of Accounting,
Vol.5 No.3,
June
16,
2016
ABSTRACT: This study evaluated the relationship between market-to-book ratio and Tobin’s Q and accounting conservatism. An important factor in adopting conservative approaches is the increased competitive pressures. Nevertheless, conservative approach reduces expectations of future performance of the businesses. This study used the data from companies listed in TSE during 2008 to 2013. Basu’s model was used to assess conditional conservatism. To evaluate the effect of market-to-book ratio and Tobin’s Q on conditional conservatism, these variables were added to Basu’s model. The tests showed a negative significant relationship between Tobin’s Q and conditional conservatism. However, the results showed no significant relationship between market-to-book ratio and conditional conservatism.