摘要：This study is motivated by the high frequency of loss occurrence since late 1990s among Malaysian
public listed firms, and the conflicting findings of the impact of the macroeconomic conditions and
firm-specific attributes on different measures of earnings quality. In addition, this study examines
the impact of firms’ specific attributes on earnings quality using a better established theory, known
as the life-cycle hypothesis. The objectives of this study are; (1) to examine the relationship between
firms’ loss condition on conservatism as an earnings quality measure as well as the moderation
of macroeconomic condition on the relationship and (2) to examine the relationship between
life-cycle stages and conditional conservatism. Samples for the study are companies listed on Bursa
Malaysia from 1995 to 2010. Using the C_Score measure of conservatism as the dependent variable,
firms with loss condition, have been found to be significantly more conservative than profit
firms. In addition, macroeconomic condition, strengthen the relationship between loss and conservatism
when the results indicate that loss firms undergoing economic crisis are significantly more
conservative than loss firms under normal economic condition. Incorporating the firms’ life-cycle
stages, the study found that growth firms signal fewer losses than mature firms, thus accepting the
set hypothesis. Implication of this study is that ignorance of these issues could lead to significantly
misleading interpretation of earnings quality.
