Corporate suppliers and customers and accounting conservatism

• 成果类型: Article
• 署名作者: Hui, Kai Wai; Klasa, Sandy; Yeung, P. Eric
• 署名单位: University System of Georgia; University of Georgia; Hong Kong University of Science & Technology; University of Arizona
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2011.11.007
• 发表日期: 2012
• 关键词: capital structure; unconditional conservatism; asymmetric timeliness; FISHER BODY; earnings; management; INFORMATION; performance; COMPETITION; LITIGATION

摘要

We argue that a firm's suppliers and customers prefer it to account more conservatively due to information asymmetry and these stakeholders' asymmetric payoffs with respect to the firm's performance. We predict that a firm meets this demand for accounting conservatism when suppliers or customers have bargaining advantages over it that enable them to dictate terms of trade or whether trade occurs at all. We show that when a firm's suppliers or customers have greater bargaining power, the firm recognizes losses more quickly. Our findings provide insights into how a firm's powerful suppliers and customers are associated with its accounting practices and also support the contracting explanation for accounting conservatism. Published by Elsevier B.V.