CONDITIONAL CONSERVATISM: REQUIREMENT FOR EARNINGS QUALITY AND ACCOUNTING INFORMATIONAL EFFICIENCY

Abstract

The article revises the underlying concepts of the conservatism principle when applied in the unconditional Brazilian form. This essay was developed on the basis of the accounting positive approach; the existence of economic incentives takes the managers to the accounting decisions; so, the mere structure normative is not sufficient for that. It is assumed informational asymmetry between managers and users of the accounting information. The informational efficiency will be function of the managers’ potential opportunism and agents limited rationality besides the enforcement at the legal environment. The use of accounting figures for contractual monitoring, in turn, will be determined by the asymmetrical anticipation of economic losses and verifiability of accounting reports. It presents criticism about the form how to consider the conservatism of unconditional form, just depending of the uncertainty for the occurrence of facts in future; in contrast, it indicates that the informational efficiency of the accounting will be tied to the conditional aspect of just effecting registers of economic losses in the presence of signals of bad news.