Complete 46 pages APA formatted article: Determinants of financial conservatism in the United Kingdom and France.

Complete 46 pages APA formatted article: Determinants of financial conservatism in the United Kingdom and France. In the first section, which serves as a background and motivation for this investigation. the empirical studies into financial conservatism and debate on its existing measures in a summarized form has been laid out. In this chapter, a detailed literature review is presented, which elaborates on the various schools of thought regarding conservatism. The next section describes about financial distress. The co-relation between financial distress and financial conservatism is discussed. The analysis has been carried out on financial models of Ericson (as an example from the literature), Alcatel-Lucent and England and Wales Cricket Board (their financial report) as case studies and the results have been discussed to establish that the financial conservatism has its standing and strengths in corporate governance to the modern corporate world. In addition, a comparison of the term Financial Distress with the Accounting Conservatism from the literature concludes that financially conservative firms do not depend on financial distress. To carry out this comparison, a sample of small firms that defaulted on their bank debt in UK and France is taken and analyzed. The last part is devoted to the conclusion of our analysis efforts. From this study, we conclude that financial conservatism is very independent of financial distress and provides more flexibility to the firms. We find that there are several reasons to use accounting conservatism in corporate governance and that current empirical evidence indicates that conservatism has increased in the last decades. Key terms. International Financial Reporting Standards (IFRS), Financial Conservatism, Cash conservatism, Leverage Conservatism, Regression Analysis, Statistical Mean, Empirical Measure/Model, Data, Cash Flow, Financial Distress, Bankruptcy and Proxies CHAPTER 1: INTRODUCTION OF CONSERVATISM 1.1 Introduction Conservatism is the most influential principle of valuation in accounting (Watts, 2003).It is defined as the differential verifiability required for recognition of profits versus losses. Firms employ this approach to restrict the risk factor by anticipating/ portraying lower profits along with higher losses. According to the principle of conservatism in accounting in case of doubt, the accounting alternative that is least likely to overstate assets and income should be chosen. (Schroeder et al., 2001, p.78). The conservative accounting method influences both on earnings and on net asset value. The effect on earnings will depend on whether the investments are growing, stable or decreasing. Conservative accounting always results in a lower net asset value of the company. Thus, conservatism of the firm can be evaluated based on either its leverage conservatism (low leverage firms) or cash conservatism (cash rich firms) or both. (Iona et al., 2004). It is employed to avoid any misunderstanding regarding the company’s financial standing with the internal as well as external shareholders. These stakeholders can be the business shareholders, debt holders and the management. 1.2 General Approaches to Financial Conservatism 1.2.1 Revenue Recognition Firms commonly impose a strict revenue recognition policy as part of their conservative policies. This ensures that the company does not over state its revenue, hence reducing the chance of inflated gross profits appearing in its financial statements. For this purpose, the revenue is recognized only when the products are sold/services completed. all transactions are realizable. 1.2.

Show more

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more