Audit Knowledge and Accounting Conservatism: A Case of Executives’ Vocational Learning and Application

Abstract

This study examines the relation of audit knowledge and accounting conservatism based on the case of executives' vocational learning and application. The empirical results reveal the evidence of a negative relation between executives' audit knowledge and accounting conservatism. Further analysis indicates that the impact of executives' audit knowledge on accounting conservatism is only robust in companies without CEO duality. The results imply that companies with executives who have audit knowledge may adopt aggressive accounting policy and reduce the accounting conservatism of financial reports.