García-Lara, Juan M.Garcia Osma, BeatrizPenalva, Fernando2022-06-292022-06-292014-04-01García Lara, J. M., García Osma, B., & Penalva, F. (2014). Information Consequences of Accounting Conservatism. European Accounting Review, 23 (2), pp. 173-198.0963-8180https://hdl.handle.net/10016/35339We study the information consequences of conservatism in accounting. Prior research shows that information asymmetries in capital markets lead to firm-level increases in conservatism. In this paper, we further argue that increases in conservatism improve the firm information environment and lead to subsequent decreases in information asymmetries between firm insiders and outsiders. We predict and test if this decrease in information asymmetries manifests itself through: (a) a decrease in the bid-ask spread and in stock-returns volatility, and (b) an improved information environment for financial analysts, leading to more precise and less dispersed forecasts, and to more analysts following the firm. Using a large US sample for the period 1977-2007 and several proxies for conservatism we find robust evidence consistent with our expectations. Our results are in line with conservatism being useful not only for debt-holders, but also for equity-holders.eng© 2014 European Accounting AssociationAtribución-NoComercial 3.0 EspañaAccounting conservatismAsymmetric reportingInformation asymmetryInformation precisionresearch articleEconomíaEmpresahttps://doi.org/10.1080/09638180.2014.882263open access1732198European Accounting Review23AR/0000015279