Adjustment of conditional conservatism model with respect to the effects of Theory Cost Stickiness

The aim of this study was to modify the model of conditional conservatism with regard to the effect of theory costs stickiness in listed companies on the Tehran Stock Exchange. So, in this research, models of Basu (1997), Khan and Watts (2009) and Lafond and Raychaudhuri (2008 were adjusted based on the impact of Cost stickiness theory. For this purpose, two hypotheses are developed. Required data were collected from a sample of 105 companies listed on the Tehran Stock Exchange during 2006 to 2015. The collected data were analyzed using panel data regression model with fixed effects approach. Results showed that the lack of control on costs stickiness in conservatism models, causes upward bias in estimation of conservatism. In other words, the adjusted model showed a more accurate estimate of a conservative measure. Also, results showed that conservatism estimates of changes in the standard model would be distorted, because of the lack of control on cost stickiness changes in listed companies on the Tehran Stock Exchange