Financial reporting quality

Question 1

Benefits of conservatism

Answer 1

1. Protection for less informed parties
2. Litigation risk reduction
3. Protection for regulators and politicians
4. Tax benefits

Question 2

Analyst concerns for bias

Answer 2

1. Timing of revenue recognition
2. Channel stuffing
3. Sales returns
4. Days Sales Outstanding
5. Bill-and-hold transactions
6. Rebates
7. Multiple deliverables