The Relationship of between Accounting Conservatism and Financial Reporting Readability in Public Companies

Abstract

Subject and Purpose of the Article: One of the most important factors in achieving comprehensible information is that one can read it correctly and process it easily while reading. This capability is referred to as readability in the theoretical foundations of the last decade. The readability of financial reports is one of the important factors influencing investors' decisions. On the other hand, conservatism in financial reporting has a historical role in the selection and application of accounting principles and practices and may affect the readability of financial reports. Therefore, this study seeks to study the relationship between conditional and unconditional working environment with financial reporting readability. Research Method: The data of 59 companies during the years 2012 to 2019 were tested by combined data analysis method. Research Findings: The results of the hypothesis testing showed that conditional and unconditional conservatism have a negative and significant relationship with financial reporting readiness which effect of conditional conservatism has been greater. Conclusion, Originality and its Contribution to the Knowledge: The results of this study double the need to pay attention to the concept of conservatism and the ability to understand financial reports in the public sector.

Keywords

• readability
• conditional conservatism
• unconditional conservatism
• financial reporting
• public companies