The Investigation of the Impact of Conditional and Unconditional Conservatism on Agency Cost in Tehran Stock Exchange
Published: 2013
Author(s) Name: Saeid Jabbarzadeh Kangarlouei, Nasib Agazadeh Soltan Ahmadi, Morteza Motavassel |
Author(s) Affiliation: Islamic Azad University, Iran
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Abstract
The aim of this study is to investigate the relationship
between conservatism and agency costs in firms
listed in Tehran Stock Exchange (TSE). To do so, a
sample of 588 firms is selected as research sample
for the period of 2004-2010 and fixed effect regression
model is used to test hypotheses. C- i¡¡ score index is
used to measure unconditional conservatism and Ball
and Shivakumar (2005) model to measure conditional
conservatism. Multiplying Tobin’s Q by free cash flow
is considered a proxy for agency cost as independent
variable. The results show that conditional conservatism
has a negative and significant impact on agency cost
while unconditional conservatism has a positive and
significant impact.
Keywords: Conditional Conservatism, Unconditional Conservatism, Agency Costs
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