Accounting Conservatism and its Impact on the Forecasting Financial Failure in Industrial Companies Listed on the Amman Stock Exchange: an Analytical Study

Abstract

This study aimed to try to find a way to predict the advanced stages of financial failure in Industrial corporations listed on the Amman Stock Exchange (ASE), and that by measuring the level of the conservatism the accounting abide by these companies, and by knowing whether there was a relationship between the Accounting Conservatism and forecasting financial failure. To achieve these results, the researchers used model (Basu, 1997) to measure the Accounting Conservatism, and model (Altman and mccough, 1995) to predict the financial failure, was the use of multiple linear regression model to test the hypotheses of the study and clarify the relationship between them.

The study sample included industrial companies listed on the ASE and the number of (74), were excluded (14) company due to lack of information, to become the sample used in the study sample (60) company, and during the period from 2008 to 2012), and came results of the study are consistent with several previous studies have shown that industrial companies listed on the Amman Stock Exchange is committed to an acceptable degree of Accounting Conservatism, and that there is an impact of the Accounting Conservatism to predict the financial failure of those companies, and the findings also indicated that there is a relationship medium between the Accounting Conservatism, forecasting financial failure .