{'fraction_non_alphanumeric': 0.02258064516129032, 'fraction_numerical': 0.00913978494623656, 'mean_word_length': 5.061889250814332, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 1, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Introduction to the Special Section on Conservatism in Accounting

The idea that financial reporting embeds the doctrine of conservatism has been recognized since its inception. It is therefore unsurprising that textbooks and research have dealt with this accounting issue. The traditional approach has focused on the balance sheet (like the lower of cost and market principle) and on the fact that a firm’s book value of equity is typically less than its market value. However, a paper due to Basu, published in 1997, changed the perspective radically by studying conservatism empirically from the point of view of the income statement. In this view, conservatism means accountants are prescribed not to shy away from anticipating losses but leave potential gains untouched until realized. The paper has had a significant impact on research, and accordingly, we decided that there might well be a considerable demand for a European Accounting Review issue that focuses on conservatism. Hence the reason for this Special Section. We also faced the fact that, as tends to be the case whenever a topic catches fire, there is controversy and confusion surrounding the underlying paradigm. This led to a second decision. We invited Stephen Ryan, at the Stern School of Business, New York University, to write a general commentary on issues surrounding the research of conservatism. Fortunately, Steve accepted and thus his contribution appears in this Section. Much of his discussion clarifies some of the outstanding confusion, in particular, the difference between unconditional vs. conditional conservatism (i.e. the balance sheet vs. the income statement). Perhaps more importantly, Steve also elaborates on the many econometric problems a researcher must face up to in any application of the basic Basu European Accounting Review Vol. 15, No. 4, 507–509, 2006