Measuring and Analyzing the Relationship Between Accounting Conservatism in Financial Reports and the Cost of Capital

A Standard Study of a Sample of Algerian Joint Stock Companies for the Period 2012-2019

Abstract

The study aims to identify the level of accounting conservatism in financial reports and
its relationship to the cost of capital by measuring the effect of accounting conservatism on the cost
of capital using a sample of Algerian institutions for a period of 8 years from 2012 to 2019, where
the negative accruals scale was used to measure accounting conservatism, and the cost of capital
through the weighted median cost scale, through four stages, which included: first, the definition of
the concept of accounting conservatism and the cost of capital, then studying the relationship
between conservatism and the cost of capital to the stage of the applied study to test the sample
hypotheses Consists of (41) Algerian joint stock companies during the period from 2012-2019. The
results of the study showed a significant and direct correlation between the degree of accounting
conservatism in financial reports and the cost of capital. The results also showed that the size of
companies and financial leverage had no effect on the relationship between conservatism and the
cost of capital. Capital in Algerian joint stock companies.