The Effect of Conservative Accounting on the Bondholder-Shareholder Conflict and Cost of Debt
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Prior research on conservative accounting and bondholder-shareholder conflict show that firms with higher degree of conservatism experience less austere conflict and lower cost of debt. However, since the implementation of IFRS in 2005, conservatism has been widely reduced in favor of fair value principles. This study sets out to examine if accounting conservatism still mitigates the conflict and reduces cost of debt. We regress two measures of conservatism on three conflict proxies and debt cost, respectively, for firms on the Norwegian market. Our results support the conclusion that conservative accounting mitigates the bondholder-shareholder conflict even after the introduction of IFRS, but we find no significant evidence that bondholders reward high level of conservatism with lower cost of debt.
Place, publisher, year, edition, pages
2013. , 39 p.
Conservative Accounting, Bondholder-Shareholder Conflict, Corporate Debt, Bond Spread, Dividend Policy, Norway
IdentifiersURN: urn:nbn:se:uu:diva-194343OAI: oai:DiVA.org:uu-194343DiVA: diva2:605006
2013-02-12, 17:55 (English)
UppsokSocial and Behavioural Science, Law