The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector
Journal of Finance and Accounting
Volume 6, Issue 3, May 2018, Pages: 91-95
Received: Aug. 28, 2018; Accepted: Sep. 10, 2018; Published: Oct. 9, 2018
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Odai Haitham AlJaloudi, Department of Accounting and AIS, Al Balqa Applied University, Al Balqa, Jordan
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Reporting quality considered to be a significant factor of the Financial Accounting Standard Board (FASB), while accounting conservatism is a serious constraint that linked to the main criteria of the accounting information. In this study, an investigation of the impact of conservatism policy on the reporting quality of banks in Jordan has been carried out. For this purpose, data is collected for 15 Jordanian banks listed on the official website of the Amman Stock Exchange for a total duration of 10 years from 2008-2017. Initially, it is examined whether the selected banks practice conservatism or not and then the variable is operationalized in terms of a categorical variable having two main categories of conservatism and non-conservatism. Similar the reporting quality is also a qualitative variable that is operationalized as a binary variable using the extent of disclosed information in financial statements as a proxy for reporting quality, like financial reports containing detailed information in the form of notes are considered as providing quality information having a value of 1 and 0 otherwise. The binary logistic regression method is adopted in this study as a quantitative technique for data analysis which expresses the impact of the independent variable on the dependent variable in form of the odds ratio. The study findings show that Jordanian banks most of the time implement conservatism policy and it significantly influences their reporting quality. Moreover, it has been found that Jordanian banks practice accounting conservatism while disclosing their financial information and such conservatism practice has a positive impact on their reporting quality.
Conservatism Policy, Reporting Quality, Financial Information, Jordanian Banks
To cite this article
Odai Haitham AlJaloudi, The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector, Journal of Finance and Accounting. Vol. 6, No. 3, 2018, pp. 91-95. doi: 10.11648/j.jfa.20180603.12
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