International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12
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 Volume 10, Issue 2 (February 2023), Pages: 192-201

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 Original Research Paper

 Conservatism and its determinants for Portuguese small and medium entities

 Author(s): 

 Cláudia Pereira 1, *, Luís Gomes 1, Natália Martins 2

 Affiliation(s):

 1CEOS.PP/ISCAP/P.PORTO, São Mamede de Infesta, Portugal
 2ISCAP/P.PORTO, São Mamede de Infesta, Portugal

  Full Text - PDF          XML

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0002-2643-1824

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2023.02.023

 Abstract:

In this study, we aim at analyzing whether Portuguese small and medium entities (SMEs) are accounting conservatively and what the determinants for conservatism are. While conservatism remains on accounting for a long time, both within the local accounting standards and IFRS firms may opt for a revaluation model to subsequently measure fixed assets. As the number of assets may be carried to higher values than firm becomes less conservative. Therefore, we propose that revaluations are a negative proxy for conservatism. We find that revaluations are not used in an often manner and they are higher for listed than for unlisted firms. Furthermore, our results suggest that debt and firm size are both positively associated with conservatism. Both associations are more significant for listed than non-listed firms. In addition, return on equity tends to increase conservatism, but only for the most indebted unlisted firms. These pieces of evidence are consistent with conservatism being a mechanism to regulate managers’ activity and to capture the confidence of stakeholders.

 © 2022 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Accounting conservatism, Determinants of revaluations, Debt, Size

 Article History: Received 1 August 2022, Received in revised form 9 November 2022, Accepted 11 November 2022

 Acknowledgment 

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Pereira C, Gomes L, and Martins N (2023). Conservatism and its determinants for Portuguese small and medium entities. International Journal of Advanced and Applied Sciences, 10(2): 192-201

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 Tables

 Table 1 Table 2 Table 3 Table 4 Table 5

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