Contrast of perspectives: The role of corporate governance structures on conservative behavior of Philippine publicly listed firms
Date of Publication
2013
Document Type
Bachelor's Thesis
Degree Name
Bachelor of Science in Applied Economics
Subject Categories
Economics
College
Ramon V. Del Rosario College of Business
Department/Unit
Economics
Defense Panel Member
Angelo Unite
Rachel C. Reyes
Abstract/Summary
Recent debates and controversies have led to a paradigm shift towards the role of reliable financial reporting in corporate governance. Despite empirical research on the association of corporate governance and accounting conservatism conducted in other countries, these studies remain inconclusive due to conflicting results and the lack of solid theoretical foundations. To our knowledge, we are the first to explore the relationship between corporate governance and conservatism in the Philippine setting. We extend the implications of such research by presenting economic theories (traditional agency and stewardship theory) to rationalize the two competing hypothesis, the substitutive and complementary relationship, respectively. Through a panel data regression analysis of secondary firm-level data on Philippine publicly listed corporations from 2002 to 2011, we find that corporate governance and accounting conservatism are viewed as substitutes rather than complements. Weak corporate governance causes higher demand for conservatism. This further corroborates the traditional agency theory as an overriding principle that drives management decisions. Moreover, firms affiliated with corporate family groups are found to be generally less conservative because of the lower verification requirements placed on accounting information. With such findings, we assert that significant caution must be placed on the use of accounting conservatism due to its unsustainability as a substitute for established corporate governance mechanisms because of its negative impact on financial reporting.
Abstract Format
html
Language
English
Format
Accession Number
TU20065
Shelf Location
Archives, The Learning Commons, 12F, Henry Sy Sr. Hall
Physical Description
98 leaves ; 28 cm.
Keywords
Self-actualization (Psychology); Corporate Governance
Recommended Citation
Hwang, C. K., Leveriza, H. H., Samson, R. C., & Sy, S. F. (2013). Contrast of perspectives: The role of corporate governance structures on conservative behavior of Philippine publicly listed firms. Retrieved from https://animorepository.dlsu.edu.ph/etd_bachelors/11309
