Unconditional conservatism in code law European high- and low-technology industries in times with and without economic turmoil

Within this study the difference in the level of unconditional conservatism in code law European listed firms in low-technology industries and high-technology industries is studied. It is expected that the level of unconditional conservatism is higher in high-technology industries due to regulations around research and development expenses. Furthermore it is studied whether the level of unconditional conservatism is different in times with economic turmoil compared with times without economic turmoil. To study this a normal and an adapted earnings-return regression of Basu (1997) are used including a dummy variable to define the times with economic turmoil and the times without economic turmoil. The results of this study show that there is a significant higher level of unconditional conservatism in high-technology industries compared with low-technology industries. For low-technology industries as well as for high-technology industries a significant lower level of unconditional conservatism is found within times with economic turmoil compared with times without economic turmoil. The results of this study could be useful for standard setters, managers, investors and other stakeholders.