Measurement of Conservatism for Empirical Research

This chapter reviews the primary empirical models used in conservatism literature to identify manifestations of conservatism and its connections with capital market determinants and outcomes. It discusses the most widely adopted methods for measuring conditional conservatism, highlighting the strengths and weaknesses of these models. Additionally, the chapter covers the measurement of different forms of conservatism, including unconditional conservatism, balance sheet conservatism, and non-discretionary conservatism.