Conservatism’s Role in the Italian Stock Market: Three Empirical Studies

This chapter presents three empirical studies on the relationship between conservatism and the Italian stock market. The first study examines alternative model specifications, comparing findings with U.S. market literature to enhance understanding of financial reporting practices in different markets. It also investigates how capital market pressures influence conservatism and evaluates firm-year-specific conservatism proxies in the Italian context. The second study analyzes conservatism’s impact on the Italian stock market during the Covid crisis, focusing on abnormal returns, daily return volatility, and abnormal trade patterns around and after the national lockdown. The third study examines whether Italian firms reduced conservatism during the post-Covid recovery, revealing that firms with strong capital market demands maintained conservative practices while others did not.