Conservatism and reduce stock price crash risk

This paper investigates the role of financial reporting conservatism in reducing stock price crash risk using a sample of Iranian firms over the period of 2005-2010. We used khun and watts (2009) CSCORE to measure accounting conservatism، and Kim and Zhang (2010) CRASAH criterion to measure stock price crashes. The result of testing the first hypothesis implies that conservatism reduces stock price crash risk. However، no significant difference was observed for firms with higher information asymetries. The results are consistent with prior researches on the first hypothesis and inconsistent with the second hypothesis.