Asymmetric timeliness of earnings, market-to-book and conservatism in financial reporting

Sugata Roychowdhury*, Ross L. Watts

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

238 Scopus citations


Using an accounting conservatism theory that reflects accounting's role in practice, we investigate the relation between two extensively used measures of conservatism: asymmetric timeliness of earnings and the market-to-book ratio (MTB). We predict and observe that when asymmetric timeliness is measured cumulatively over long periods, its relation with end-of-period MTB is positive. When asymmetric timeliness is measured over short periods, its dependence on beginning-of-period composition of equity value (EV) is responsible for its negative association with MTB. Further, asymmetric timeliness appears to measure conservatism more efficiently when it is estimated cumulatively over multiple periods.

Original languageEnglish (US)
Pages (from-to)2-31
Number of pages30
JournalJournal of Accounting and Economics
Issue number1-2
StatePublished - Sep 2007
Externally publishedYes


  • Accounting
  • Accruals
  • Asymmetric timeliness
  • Conservatism
  • Contracting
  • Debt contracting
  • Goodwill
  • Market-to-book
  • Role of accounting

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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