Determinants of Accounting Conservatism: A Literature Review on Growth Opportunities, Debt Covenants, and Capital Intensity

Abstract

Accounting conservatism is an important principle in financial reporting that emphasizes prudence in recognizing gains and losses and contributes to improving the reliability of accounting information. This study aims to analyze and synthesize the influence of growth opportunity, debt covenant, and capital intensity on accounting conservatism based on the perspective of Positive Accounting Theory (PAT). This study uses a qualitative approach with a Systematic Literature Review (SLR) method. Data were obtained from relevant national and international scientific articles identified through academic databases, including Google Scholar, Scopus, and SINTA. The literature selection process involved identification, screening, eligibility assessment, and full-text review, resulting in 10 articles that met the established inclusion criteria. The findings indicate that growth opportunity and debt covenant show inconsistent results across previous studies, while capital intensity demonstrates a relatively more consistent relationship with accounting conservatism, although several studies report insignificant findings. These differences may be associated with variations in company characteristics, industry sectors, observation periods, measurement proxies, and corporate governance mechanisms. Overall, the findings indicate that growth opportunity, debt covenant, and capital intensity are relevant factors in explaining accounting conservatism, although their effects vary across research contexts. This study contributes to the accounting literature by synthesizing previous findings and highlighting the relevance of accounting conservatism to financial governance, transparency, investor protection, and corporate accountability.