The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector

Odai Haitham AlJaloudi

doi:doi:10.11648/j.jfa.20180603.12

| Peer-Reviewed |

The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector

Odai Haitham AlJaloudi

Received: 28 August 2018 Accepted: 10 September 2018 Published: 9 October 2018

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

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.

DOI	10.11648/j.jfa.20180603.12
Published in	Journal of Finance and Accounting (Volume 6, Issue 3, May 2018)
Page(s)	91-95
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Conservatism Policy, Reporting Quality, Financial Information, Jordanian Banks

References

[1]	Najjar J (2014) Measuring the level of accounting conservatism in the financial statements and its effect on the market values of the shares: Applied study on the Palestine companies. Journal of Plqa Research and Studies17: 177-224.
[2]	Ball R, Kothari S (2007) Econometrics of the Basu asymmetric timeliness coefficient and accounting conservation. Social Science Research Network.
[3]	Ball R, Robin A, Sadka G (2008) Is financial reporting shaped by debt markets or by equity markets? An international study of timeliness and conservatism. Review of Accounting Studies 13: 168-205.
[4]	Sana, N. M. (2016) The Effect of Accounting Conservatism on Financial Performance Indicators in the Jordanian Insurance Companies. Journal of Banking and Commerce. 2, 1: 1-16.
[5]	Ball R, Shivakumar L (2005) Earnings quality in UK private firms: comparative loss recognition timeliness. Journal of Accounting and Economics 39: 83-128.
[6]	Jomely A (2014) Accounting conservatism and its effect on the prediction of financial failure in Jordanian industrial companies: Analytical study. Master Theses, Zarqa private University, Jordan.
[7]	Eqbal, Omar, legdah, Mamon (2014) The effect of financial crises on the support of the accounting conservatism policy: A study in Jordanian industrial companies. Najah University Journal for Research 8: 895-920.
[8]	Amman Stock Exchange (2018) Retrieved from: https://www.ase.com.jo/en/equities [Accessed August 5, 2018].
[9]	Wang RZ (2013) Operating risk and accounting conservatism: an empirical study. The International Journal of Business and Financial Research 7: 12-29.
[10]	Hanan M (2012) The effect of the accounting conservatism in improving earnings quality of financial reporting: A Case Study of Jordanian industrial companies. Aldrasat Administrative Sciences 38: 33-55.
[11]	Hendriksen, Eldon S, Richard D (1982) Accounting Theory. Irwin. Inc.
[12]	Cullinana CP, Wangb F, Wangb P, Zhangb J (2012) Owner ship structure and accounting conservatism in China. Journal of International Accounting, Auditing.
[13]	Latridis G (2011) Accounting disclosures, accounting quality and conditional and unconditional conservatism. International Review of Financial Analysis 20: 88-102.
[14]	Khair T (2008) New perspective of accounting conservatism: Applied study in Egyptian companies. Scientific Journal for Commercial and Financing 5: 55-77.
[15]	Lara J, Torres J, Veira P (2007) Board of directors’ Characteristics and conditional accounting conservatism: Spanish Evidence. European Accounting Review 16: 705-727.
[16]	Penman SH, Zhang XJ (2002) Accounting conservatism, the quality of earnings, and stock returns. The Accounting Review 77: 237-264.
[17]	Givoly D, Hayn C (2000) The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative. Journal of Accounting and Economics 29: 287-320.
[18]	Daneshmand BJ, Moeinaddin M, Dehnavi HD (2014) The Effect of Earnings Management on The Stock Liquidity. Interdisciplinary Journal of Contemporary Research in Business 5: 73-81.
[19]	Chiraz D, Jaboui A (2013) Earning Management and Performance of French IPO Companies. Journal of Accounting and Taxation 5: 1-14.
[20]	Hejazi R, Zinat A, Mehdi S, Fahime E (2011) The Impact of Earnings Quality and Income Smoothing on the Performance of Companies Listed in Tehran Stock Exchange. International Journal of Business and Social Science 17: 193-197.
[21]	Abbas A, Nikbakht Z (2009) Income Smoothing Real Earnings Management and Long-Run Stock Returns. Business Intelligence Journal 3: 55-73.
[22]	Chan, K., Chan, L. K. C., Jegadeesh, N., Lakonishok, J. (2006) Earnings Quality and Stock Returns. Journal of Business 79: 1041-1082.
[23]	Gill, A, Bigger, N., Mathur, N. (2010) The relationship between working capital management and profitability: Evidence from the United States. Business and Economics Journal 10:1-9.
[24]	Kieso, D., Weygand, J.and Warfield, T (2014) Intermediate accounting (15th edn.). Wiley and Sons, New Jersey.
[25]	Harrell F E (2015) Binary Logistic Regression. In: Regression Modelling Strategies. Springer Series in Statistics. Springer, Cham. Pp. 219-274.
[26]	Szumilas M (2010) Explaining Odds Ratio. Journal of the Canadian Academy of Child Adolescent Psychiatry. 19:227-229.

Cite This Article

Plain Text BibTeX RIS

APA Style

Odai Haitham AlJaloudi. (2018). The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector. Journal of Finance and Accounting, 6(3), 91-95. https://doi.org/10.11648/j.jfa.20180603.12

Copy | Download

ACS Style

Odai Haitham AlJaloudi. The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector. J. Finance Account. 2018, 6(3), 91-95. doi: 10.11648/j.jfa.20180603.12

Copy | Download

AMA Style

Odai Haitham AlJaloudi. The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector. J Finance Account. 2018;6(3):91-95. doi: 10.11648/j.jfa.20180603.12

Copy | Download

@article{10.11648/j.jfa.20180603.12,
  author = {Odai Haitham AlJaloudi},
  title = {The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector},
  journal = {Journal of Finance and Accounting},
  volume = {6},
  number = {3},
  pages = {91-95},
  doi = {10.11648/j.jfa.20180603.12},
  url = {https://doi.org/10.11648/j.jfa.20180603.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20180603.12},
  abstract = {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.},
 year = {2018}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector
AU  - Odai Haitham AlJaloudi
Y1  - 2018/10/09
PY  - 2018
N1  - https://doi.org/10.11648/j.jfa.20180603.12
DO  - 10.11648/j.jfa.20180603.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 91
EP  - 95
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20180603.12
AB  - 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.
VL  - 6
IS  - 3
ER  -

Copy | Download

Author Information

Odai Haitham AlJaloudi

Department of Accounting and AIS, Al Balqa Applied University, Al Balqa, Jordan

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Odai Haitham AlJaloudi. (2018). The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector. Journal of Finance and Accounting, 6(3), 91-95. https://doi.org/10.11648/j.jfa.20180603.12

Copy | Download

ACS Style

Odai Haitham AlJaloudi. The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector. J. Finance Account. 2018, 6(3), 91-95. doi: 10.11648/j.jfa.20180603.12

Copy | Download

AMA Style

Odai Haitham AlJaloudi. The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector. J Finance Account. 2018;6(3):91-95. doi: 10.11648/j.jfa.20180603.12

Copy | Download

@article{10.11648/j.jfa.20180603.12,
  author = {Odai Haitham AlJaloudi},
  title = {The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector},
  journal = {Journal of Finance and Accounting},
  volume = {6},
  number = {3},
  pages = {91-95},
  doi = {10.11648/j.jfa.20180603.12},
  url = {https://doi.org/10.11648/j.jfa.20180603.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20180603.12},
  abstract = {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.},
 year = {2018}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Conservatism Policy on Reporting Quality in Jordanian Banks Sector
AU  - Odai Haitham AlJaloudi
Y1  - 2018/10/09
PY  - 2018
N1  - https://doi.org/10.11648/j.jfa.20180603.12
DO  - 10.11648/j.jfa.20180603.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 91
EP  - 95
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20180603.12
AB  - 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.
VL  - 6
IS  - 3
ER  -

Copy | Download