In view of the global and local financial collapses and their role in shaking the investors’ confidence in the published financial reports, the accounting literature has moved to accounting conservatism as one of the most important accounting policies. Due to the opportunistic use of the administration of this policy and the low level of accounting conservatism of Saudi corporates, literature attempted to find a mechanism that can help reduce such behavior. It resulted in corporate governance principles and the ability to use accounting methods leading to the use of accounting conservatism in the published financial reports. Therefore, the present study is significant because there is not a study in the Saudi accounting literature that investigated this relationship. It aims to investigate the relationship between corporate governance principles (shareholders’ equity, transparency and disclosure, board independence, audit committee, and stakeholders) and accounting conservatism. It also aims to find out whether it is positive or negative. Accordingly, it tested a main hypothesis that there is no statistically significant correlation between corporate governance principles and accounting conservatism. It concluded that there is a statistically significant correlation between all corporate governance principles and accounting conservatism for all companies under investigation. It recommends that decision makers in the Saudi Stock Exchange shall enforce applying corporate governance principles due to their positive impact on the integrity of the published financial reports.
Keywords: Accounting Conservatism, Corporate Governance Principles, Saudi Stock Exchange
