More Evidence of Bias in the Differential Timeliness Measure of Conditional Conservatism

• 成果类型: Article
• 署名作者: Patatoukas, Panos N.; Thomas, Jacob K.
• 署名单位: University of California System; University of California Berkeley; Yale University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-10101
• 发表日期: 2011
• 页码: 1765-1793
• 关键词: asymmetric timeliness; to-book; earnings; accruals

摘要

Despite the conceptual appeal and popularity of the differential timeliness (DT) measure of conditional conservatism proposed in Basu (1997), Dietrich et al. (2007) and Givoly et al. (2007) have identified considerable biases associated with that measure. We renew their call to avoid using the DT measure because it is affected unexpectedly by two empirical regularities-namely, scale is negatively related to (1) deflated mean earnings and (2) variance of stock returns. Even though these regularities are unrelated to conditional conservatism, their joint effect is substantial and pervasive. More importantly, prior findings regarding time-series and cross-sectional variation in differential timeliness are confounded by corresponding variation in these regularities.