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Accounting conservatism, environmental uncertainty and the capital structure

journal contribution
posted on 06.12.2017, 00:00 by A Habib, Mahmud HossainMahmud Hossain
The purpose of this paper is to examine the effect of reporting conservatism on firm’s capital structure decisions and the role of environmental uncertainty as a moderating variable. While the role of conservatism has been investigated in certain debt-contracting setting, evidence is sparse about the effect of conservatism on the degree of financial leverage. We examine this issue using a sample of Australian firms from 1992 to 2005. We find that accounting conservatism positively affect a firm’s leverage structure. Further, we find that the relation between accounting conservatism and firm leverage is moderated by environmental uncertainty context; however this finding is not robust to all three proxies that we used to measure conservatism.

History

Volume

11

Issue

1

Start Page

123

End Page

135

Number of Pages

13

eISSN

1810-3057

ISSN

1727-9232

Location

Ukraine

Publisher

Virtus Interpress

Language

en-aus

Peer Reviewed

Yes

Open Access

No

External Author Affiliations

Auckland University of Technology; Curtin University;

Era Eligible

Yes

Journal

Corporate ownership & control.