The impact of accounting conservatism on the relationship between earnigs and stock returns, change in operating cash flow and sales of publicly listed companies in the Philippines
Date of Publication
Bachelor of Science in Accountancy
Ramon V. Del Rosario College of Business
Herminigilda E. Salendrez
Defense Panel Member
Mark Vincent B. Bendo
Feliciano S. Almazora, Jr.
Michael Edward Mercado
The purpose of this study aims to find the impact of accounting conservatism on the relationship between earnings and the three indicators, namely stock return, change in operating cash flow, and change in sales in the Philippines setting. In connection with this, Osiris was used to collect available data from 2005-2014 of publicly-listed companies in the Philippines. Sample firms were partitioned into good news firms and bad news firms by using positive and negative stock return, change in operating cash flow and change in sales as proxy for it. Cumulative earnings with three-year lag effect were then compared with previous-year three indicators to see the impact on the relationship when recognizing asymmetric loss. Using pooled regression analysis, the result showed that three indicators were directly related to earnings. It was revealed that R2 for bad news model was higher than good news model, indicating that earnings reflected publicly available bad news timelier that good news. Applying conservatism, researchers found out that the impact of asymmetric loss recognition led to an inverse relationship between stock return and earnings, indicating that bad news stock return would increase the earnings in the future. On the other hand, change in operating cash flows and change in sales remained to have a direct relationship with earnings, indicating that bad news cash flow and sales would decrease future earnings. Researchers gave emphasis on the analysis using the overall years than per year basis to capture the different timeliness of the companies. In summary, this study has implication for shareholders and analysts in their decision making by understanding the concept of conservatism and the effect of it.
Archives, The Learning Commons, 12F, Henry Sy Sr. Hall
ix, 144 leaves : illustrations ; 28 cm. + 1 computer disc ; 4 3/4 in.
Corporate profits--Philippines; Accounting--Philippines
Lapuz, C. A., Lin, S. R., Santos, J. M., & Sevilla, J. D. (2016). The impact of accounting conservatism on the relationship between earnigs and stock returns, change in operating cash flow and sales of publicly listed companies in the Philippines. Retrieved from https://animorepository.dlsu.edu.ph/etd_bachelors/7165