The Effect of Conservative Reporting of Depreciation on the factors such as, Return of Stock, Value Relevance and Sustainability of Profit

Conservative Reporting has different positive and negative effects on companies. For example، the positive effects are: increase the quality of financial information and in the result decrease the information risk and cost of capital of companies. In addition، it is said that by following the principle of conservatism، the sustainability and also the value relevance of financial information will increase. By increasing the sustainability of financial information، the ability of judgment by management and in the result، sustainability of profit، will decrease. Also، the capital market expectations over future performance of companies decrease. In this study، the effect of conservative approach reporting depreciation on factors such as return of stock، value relevance and sustainability of profit has been investigated. For this purpose information of companies listed on Tehran Stock Exchange between 2001 and 2011 and multiple regression models were used. Results show that companies that have conservative approach، have more return of stock and less sustainability of profit، but value relevance of profit of these companies doesn‟t have any significant difference with other companies.