Investigate of the Relation between Accounting Conservatism (Unconditional and Conditional) and Bankruptcy Risk

This paper Investigate the relation between accounting conservatism and bankruptcy risk، so that by scrutiny the relation with survey components of conservatism (unconditional and conditional)، illuminate the role and position of conservatism in accounting. Conditional conservatism involves the more timely recognition of bad news than good news in earnings. Conditional conservatism is distinct from unconditional conservatism، which involves the predetermined understatement of the book value of net assets، as occurs with the immediate expensing of the costs of most intangibles. In this rummage، bankruptcy risk measure is calculated from Campbell (2008); and for estimating conservatism، are used two measures of unconditional conservatism (UC-BM) and conditional conservatism (CC-CR). The sample refers to 84 firms accepted in Tehran Stock Exchange along the period 2003-2009. Results of testing research hypotheses show that there are significant contemporaneous and subsequent relations between unconditional conservatism (UC-BM) and bankruptcy risk. On the other hand، no significant relation، neither contemporaneous nor subsequent، is found between conditional conservatism (CC-CR) and bankruptcy risk.