Accounting conservatism in Portugal: similarities and differences facing Germany and the United Kingdom

Main Article Content

Leonor Fernandes Ferreira
Juan Manuel García Lara
Tiago Gonçalves


This paper examines the existence of conservative practices in the Portuguese accounting system, and whether these conservative practices affect the comparability of financial information provided by companies. We particularly examine whether the book value figure can be understated due to conservative practices to protect creditors' interests (balance sheet conservatism) and whether accountants delay the recognition in earnings of good news, while they recognize immediately bad news (earnings conservatism). Using a Basu (1997) type reverse regression and a simple adaptation of the Ohlson (1995) valuation model, the paper gives evidence concerning the existence of both definitions of conservatism in Portuguese accounting practices. A sample of non-financial Portuguese, German and British companies was used. Our results also show the larger earnings conservatism of British firms relative to Portugal and Germany, and surprisingly, that Portugal is more BS (larger understatement of shareholders' equity) conservative than the United Kingdom. The results have implications for accounting standard setting and they can be useful for both the European Commission and the IASB since they provide some insight into the properties of accounting figures in Portugal.


Download data is not yet available.

Article Details

How to Cite
Ferreira, L. F., García Lara, J. M., & Gonçalves, T. (1). Accounting conservatism in Portugal: similarities and differences facing Germany and the United Kingdom. Journal of Contemporary Administration, 11(spe2), 163-188.
Author Biographies

Juan Manuel García Lara, Universidad Carlos III de Madrid Departamento de Economía de la Empresa

PhD em Contabilidade pela Universidad de Valencia, Spain. Professor Titular (Professor Associado) da Universidad Carlos III de Madrid, Spain. Sua área de interesse em pesquisa é Contabilidade Financeira

Tiago Gonçalves, Universidade Técnica de Lisboa

Mestre em Gestão pelo Instituto Superior de Economia e Gestão da Universidade Técnica de Lisboa, Professor Assistente da Universidade Técnica de Lisboa. Suas áreas de interesse em pesquisa são Contabilidade Financeira e Mercados de Capitais