Conservatism of earnings and investor protection

• Main Authors: Sofian, Saudah, Abdul Rasid, Siti Zaleha, Mehri, Mohammadghorban
• Format: Article
• Published: Centre for Promoting Ideas, USA 2011
• Subjects: HD28 Management. Industrial Management
• Online Access: http://eprints.utm.my/id/eprint/39804/; http://ijbssnet.com/journals/Vol._2_No._14;_July_2011/17.pdf
• Institution: Universiti Teknologi Malaysia

This paper reviews the conservatism of earnings and cost of equity to enhancement and improvement of quality information pertaining to earnings quality that leads to the reduction of information asymmetry (information risk) and consequently reduces cost of equity. Review of this paper suggests that managers should disclose more quality information particularly related to earnings in order to increase investor’s willingness to invest in capital market. Therefore, this paper intends to resolve the issue of information asymmetry by determining the role of conservatism of earnings on cost of equity.