Title

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

2016

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Accountancy

College

Ramon V. Del Rosario College of Business

Department/Unit

Accountancy

Thesis Adviser

Herminigilda E. Salendrez

Defense Panel Member

Mark Vincent B. Bendo
Feliciano S. Almazora, Jr.
Michael Edward Mercado

Abstract/Summary

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.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU23371

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

ix, 144 leaves : illustrations ; 28 cm. + 1 computer disc ; 4 3/4 in.

Keywords

Corporate profits--Philippines; Accounting--Philippines

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