Business leaders are adjusting to the new economic realities brought about by the continuing global financial difficulties. In exploring new avenues to profitability and growth, all areas of company operations are on the table.IESE’s Fernando Peñalva, together with Juan Manuel García Lara and Beatriz García Osma, researched the link between conditional conservatism and cost of capital. Their findings, “Conditional Conservatism and Cost of Capital,” were published in the Review of Accounting Studies.
What Is Conditional Conservatism?
Conditional conservatism is an accounting practice that imposes more stringent verification requirements on economic gains than economic losses. This results in earnings that reflect losses in a timelier manner than gains, often called asymmetric reporting.
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