Accounting conservatism: A life cycle perspective

James C. Hansen, Keejae P. Hong, Sang Hyun Park

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


This paper investigates whether a firm's life cycle stage affects its reporting conservatism in the cross-section. We use two measures of reporting conservatism used in Givoly and Hayn (2000): the level of non-operating accruals and the market-to-book ratio (unconditional conservatism); and the conservatism measure suggested by Basu (1997) (conditional conservatism). Firms are classified annually into life cycle stages using procedures proposed by Dickinson (2011). We find that unconditional reporting conservatism decreases over life cycle stages, but do not find evidence that conditional reporting conservatism is associated with life cycle stages. Our findings complement Givoly and Hayn (2000) and have implications for financial statement analysis and future research on accounting conservatism.

Original languageEnglish (US)
Pages (from-to)76-88
Number of pages13
JournalAdvances in Accounting
StatePublished - Mar 2018


  • Accounting conservatism
  • Conditional conservatism
  • Firm life cycle
  • Unconditional conservatism

ASJC Scopus subject areas

  • Accounting
  • Finance


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