The Relation of Earnings Quality to Accounting Conservatism

Abstract

The aim of this article is to examine the relationship between accounting conservatism and earnings quality. Data were collected from 50 industrial corporations listed in Amman Stock Exchange (ASE) between 2004-2009. Hypotheses were tested using Ordinary Least Squares (OLS) and Binary Logistic under Pooled Regression. The findings revealed that the level of conservatism was low in such companies, but earnings quality was reasonable. The study found that there was no variance between levels of earnings quality of the Jordanian industrial corporations, due to the disparity of the level of conservatism in their financial reports.