Timeliness and conservatism: Changes over time in the properties of accounting income in France


Review of Accounting and Finance

2006, vol. 5, n°2, pp.92-107

Departments: Accounting & Management Control, GREGHEC (CNRS)

Keywords: Multivariate analysis, Accounting, Earnings, Corporate finances, France

Purpose – This paper aims to investigate the changes in the properties of accounting income published by French listed companies during the 1990s. It also analyzes the impact of certain corporate characteristics such as size, international financing, and audit firm, on such changes. Design/methodology/approach – Multivariate regression is used. Findings – In French companies, good news has a delayed impact on earnings, as accountants only allow the effect of such news to be recognized gradually in the earnings measure. Conversely, bad news is reflected rapidly in earnings. The results confirm a general upward trend in the degree of conservatism of accounting earnings over the period as a whole. However, except for firm size, none of the corporate characteristics examined can predict a company's accounting earnings properties. Research limitations/implications – In future studies, it will be interesting to develop and test other possible corporate and/or institutional factors relating to accounting earnings properties. Practical implications – The paper provides an insight analysis on the evolution of institutional environment in France and its impact on accounting. Originality/value – First study on properties of accounting income in France.