The Impact of Conditional Conservatism on Reliability and Timeliness of Disclosure

In order to access benefits of decreasing information asymmetry، management varys information policy. In the realm of information role of disclosure and conservatism، this study examines the relation between conditional conservatism and disclosure quality in the form of timeliness and reliability of information. To measure the conditional conservatism، CR from Callen and C- score from khan and watts has been used. Also، measuring of disclosure quality has been measured by corporate disclosure scores، published by the Tehran Stock Exchange. To test the hypothesis presented in this study، 142 companies listed in Tehran Stock Exchange during the years 2003 till 2010 have been studied. The first hypothesis indicates that a negative relation between conditional conservative and accounting disclosure quality exists. In the other words، conditional conservatism and disclosure quality are used as two substitutive information policies. Testing the effect of timeliness of accounting information in the second hypothesis، shows that conditional conservatism significantly has a negative relation with the timeliness of disclosure and reduces management’s incentives to disclose information in timely manner. In addition، the results of this study suggest that conditional conservatism reduces the reliability of the disclosed information and increases volatility of predictions and difference of actual and predicted information.