Title: Accounting conservatism and corporate governance: evidence from the Indian banking sector

Authors: Sushma Vishnani; Meena Bhatia

Addresses: Jaipuria Institute of Management, Vineet Khand 6, Gomtinagar, Lucknow, India ' Birla Institute of Management Technology, Plot No 5, Knowledge Park II, Greater Noida, India

Abstract: This study examines the relationship between accounting conservatism and corporate governance in the Indian banking sector. Trust in banking system of a country requires presence of efficient corporate governance mechanism. Conservative accounting practices supplement corporate governance effectiveness as they are supposed to curtail opportunistic behaviour of managers, counters agency problems and promotes efficient contracting mechanisms. This study hypothesised that better governed banks shall be more conservative than the others. For the purpose of this study, Basu (1997) model is used for measuring conservatism and Sarkar et al. (2012) rankings as corporate governance measure. The results of this study confirm that better governed banks follow more conservative accounting practices.

Keywords: accounting conservatism; corporate governance; asymmetry; banking; India.

DOI: 10.1504/IJICBM.2019.102003

International Journal of Indian Culture and Business Management, 2019 Vol.19 No.3, pp.303 - 318

Received: 27 Dec 2017
Accepted: 20 Aug 2018
Published online: 03 Sep 2019 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article