The effect of the accounting conservatism on reducing information asymmetry and the cost of capital within the framework of international standards

Abstract

Accounting conservatism principle plays an important role in producing fair view of financial statements and has appeared as one of the most prominent research topics over the last 15 years. The main objective of this study is to determine the effect of the accounting reservation to reduce the asymmetry of information and the cost of capital within the framework of international standards (IFRS). To achieve the objectives of the paper, the researcher relied on reviewing 14 related studies that were published in different journals and by different authors for time periods (2015-2020). Based on the results of the aforementioned studies, the study reached several results, the most important of which is that accounting conservative has a major role in reducing the phenomenon of asymmetry of information and reduce the cost of capital within the framework of international standards (IFRS) through the commitment in the Stock Exchange listed companies to apply international standards that are conservative accounting to improve their efficiency.