Thursday, 09 Apr, 2020




The Investigation of the Impact of Conditional and Unconditional Conservatism on Agency Cost in Tehran Stock Exchange

International Journal of Financial Management

Volume 3 Issue 3

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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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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