The Impact of Accounting Conservatism on Financial Performance in Services Companies Listed on Amman Stock Exchange

Abstract

This study aimed to identifying the impact of accounting conservatism on financial performance in services companies listed on Amman Stock Exchange, where the accounting conservatism was measured through the model of (Gvoly & Hyans, 2000), an approach that based on accruals, while the financial performance was measured through the return on equity (ROE), and earnings per share (EPS). And in order to achieve the objectives of the study, the descriptive and analytical approach was adopted, where the study was conducted on a sample of (23) service companies listed on Amman Stock Exchange during the period from 2015 to 2019. Also, in respect of analyzing the study data and test its hypotheses, the statistical analysis program (SPSS) was utilized, and simple regression equation was relied on in testing the hypotheses. Whereas, the major findings of the study are as follows: There is no statistically significant impact of the accounting conservatism on the financial performance with its indicators (rate of return on equity, and profit per share) in the services companies listed on Amman Stock Exchange. Meanwhile, the study recommended the necessity of urging the researched and listed services companies’ management on Amman Stock Exchange (especially those characterized by low accounting conservatism) to apply the principles and standards of accounting conservatism, due to the importance of these procedures on the quality of the financial reports and consequently the profits therein.

Received: 23 March 2022 / Accepted: 30 June 2022 / Published: 5 July 2022