The effect of auditing assurance levels on accounting conservatism: evidence from Taiwan

Because of the adoption of IFRSs, listed companies have been required to prepare second-quarter consolidated financial statements reviewed by auditors in Taiwan since 2013. This rule changes some companies' assurance levels from audit to review by auditors, and may have the effect on accounting conservatism. Our results indicate that the decision of voluntary upgrade auditing assurance level and accounting conservatism have a significant positive relationship in family-controlled firms. Meanwhile, It also has a significant negative relationship in professional managers controlled firms. Finally, we find that the accounting conservatism of consolidated financial statements has significantly decreased after the adoption of IFRSs. It means the disclosure and transparency of consolidated financial statements were improved after the adoption of IFRSs.