Redovisningskonservatism -En studie om redovisningens försiktighet i Sverige
This study aims to measure the effect of accounting conservatism and to identify thebusiness activities causing firms to undervalue owners? equity. To estimateaccounting conservatism, we have followed the hypothesis that no firm over time cangenerate a return greater than its cost of equity, i.e. CAPM. Thus, if a firm in factgenerates an excess return over time, we assume that the excess return is an estimateof accounting conservatism within that firm.The hypothesis originates from the corporate valuation model ?Economic ValueAdded®? which tries to adjust for accounting bias. The model assumes that excessreturn generated by a firm is due to business goodwill, but over time the businessgoodwill is said to fade away, and the remaining excess return will be a constantaccounting bias.When testing the hypothesis on all of the thirty firms included in the Stockholm stockexchange (OMXS30), we find that there is a measurable accounting bias caused byheavy investment activities in intangible assets. We conclude that the accountingpractices for intangibles are outdated; as today?s practices lets you capitalize only ona few of these investment expenditures, thus causing mismatching of costs andrevenues.Keywords:Accounting conservatismAccounting biasAccounting relevanceExcess returnReturn on equityCost of equityEconomic Value Added®