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EU-US trade deal: value relevance and conservatism in converging accounting standards

Thijssen, M.W.P. (2015) EU-US trade deal: value relevance and conservatism in converging accounting standards.

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Abstract:This thesis examines the differences regarding the relation between conditional conservatism and price value relevance in the EU and US. In particular, it investigates whether the relation differs in context of different accounting standards. This paper further investigates how the presence of accruals is related to conservatism and value relevance. OLS regressions are carried out to measure conditional conservatism, price value relevance and accrual intensity. Results show that US based firms are more conservative in their accounting practice and therefore have lower value-relevant financial information. European firms, on the other hand, appear to have low levels of conservatism and high value relevance. The presence of accruals and the relation between conservatism and price value relevance did not appear to have a positive relation. However, the regression did show another relation. Interestingly, the presence of accruals is negatively related to conservatism and positive to value relevance. In conclusion, IFRS and US GAAP compliance do not appear to have relational differences regarding conservatism and value relevance. Even more so, results show equal relational directions in the presence of accruals.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/67281
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