Abstract
This study aimed to measure the level of accounting conservatism in
financial statements and reports issued by corporate companies listed at Palestinian
Security Exchange and to show the effect of accounting conservatism
on the share market value. In order to achieve the study objectives, The (Beaver
and Ryan, 2000) model and (Basu, 1997) model were used to measure the
accounting conservatism.
The study was applied on a sample of 31 Palestinian corporations
listed at Palestinian Security Exchange during the period 2005-2012. The
results of the study showed that the level of accounting conservatism in
financial statements and reports issued by Palestinian companies is low. Moreover,
the study also found that financial reports of insurance and banks sectors
in Palestinian Stock Exchange are the most conservative, whereas the investment
sector was the least conservative. Finally, the level of accounting
conservatism affects positively on the share market value.
The study recommended the need to activate the role played by the
financial market regulator to activate control over the financial reporting and
to force companies to increase the levels of conservatism within reasonable
levels. The study also recommended that external auditors should point out
how companies are committed with the adequacy of conservatism level in
financial statements and reports.