University of Isfahan Financial Accounting Research 2322-3405 4 3 2012 09 22 The Investigation of the Relationship between Conservatism and Value Relevance of Earnings with Business Cycle The Investigation of the Relationship between Conservatism and Value Relevance of Earnings with Business Cycle 71 86 16953 FA A Khodamipour Associate Professor of Accounting, Shahid Bahonar University of Kerman, Iran B Karamshahi Lecturer of Accounting, Faculty of Literature and Humanities, Shahid BahonarUniversity of Kerman, Iran A Taftian Master of Accounting, Faculty of Literature and Humanities, Shahid BahonarUniversity of Kerman, Iran Journal Article 2016 06 14 The relation between stock returns and earnings is sensitive to the business cycle. In particular, the Earnings Response Coefficient has been shown to be higher during economic boom period compared to the recession period. In this research, we investigate the relationship between earnings conservatism and business cycle in the companies listed in the Tehran stock exchange. To conduct this study,164 listed companies in Tehran stock exchange were selected during 1377-1388. Our measure of conservatism uses the regression identified by Basu (1997). In this research, we demonstrate that the conservatism and value relevance of current earnings is actually higher during economic recessions. We further demonstrate that the value-relevance of expected future earnings is higher during boom period, meaning that the association between historical accounting information and future growth opportunities would be weakened. The relation between stock returns and earnings is sensitive to the business cycle. In particular, the Earnings Response Coefficient has been shown to be higher during economic boom period compared to the recession period. In this research, we investigate the relationship between earnings conservatism and business cycle in the companies listed in the Tehran stock exchange. To conduct this study,164 listed companies in Tehran stock exchange were selected during 1377-1388. Our measure of conservatism uses the regression identified by Basu (1997). In this research, we demonstrate that the conservatism and value relevance of current earnings is actually higher during economic recessions. We further demonstrate that the value-relevance of expected future earnings is higher during boom period, meaning that the association between historical accounting information and future growth opportunities would be weakened. https://far.ui.ac.ir/article_16953_f042a484ed9ec07355b27f67fb9bfa17.pdf